Nigerian Banks Are Now Technological Driven

Boko Haram attacks coincided with government policy that has also hurt the banks. Under the Treasury Single Account policy, different government entities are no longer allowed to hold separate bank accounts. Instead, the government consolidates all inflows from its multiple agencies into a single account at the Central Bank of Nigeria. 

For banks, this has meant a sharp reduction in customers — and so, a dip in revenues. With their margins low, rebuilding operations in a region still viewed as unsafe by some isn’t a priority for many banks. Instead, they are happy to rely on the fee they earn from customers using POS machines, says a senior banker, requesting anonymity.

Nigerian banks are beginning to review their business model which is still very much the traditional banking system as technology is penetrating deeper into the tasks that workers carry out.

Read: New CBN policy charges Nigerians more for cash deposits, withdrawals

Technology has already compelled some banks to limit their expansion rate, while others are shutting down their brick and mortar structures to accommodate technology. All these are happening because technology is projected to handle 30% of the work currently done at banks.

Part of the 30% of work that will be taken over by technology is collation of tellers. This means that the staffs who work as tellers will be major casualties of the onslaught of technology. Banks are reviewing their work system because in the next two to three years, teller jobs would likely be phased out by the financial institutions.

Speaking on the projected job loss, the President, Chartered Institute of Bankers of Nigeria (CIBN), Uche Olowu, said the downsizing might occur because the banks’ traditional business model is being threatened. According to him, banks are now investing in financial technology rather than invest in expansion or brick and mortar building which will accommodate more jobs.

Apart from their investments in Fintech, banks are also investing in specialised human capital. This paradigm shift in investment focus of banks is expected to affect departments that can be technologically driven.

While defending the actions taken by banks, the Managing Director/CEO, Ecobank Nigeria, Patrick Akinwuntan, said the infusion of technology into banking services was done in a bid to remain relevant as banks gradually lose monopoly over financial transactions.

It was previously reported that the future of banks was under threat from FinTech startups and telecoms companies which received approval from the Central Bank of Nigeria (CBN) to conduct mobile money service. They were given pproval to enable the apex bank achieve its 80% financial inclusion by 2020. 

However, the growing popularity of FinTech startups and functionality of network providers as Payment Service Banks has placed some jobs in banks in jeopardy, as customers continue to get more reasons not to visit banks for some financial transactions which can now be done anywhere.