By Rarzack Olaegbe
“Channels aren’t the problem. Channels with limited capacity and resilience are the problem. These channels fail during the festive period. It is not new. No one has invested to create a sufficient capacity. Is it because it is probably not economical to do? Preaching channels to people who are frustrated by channels is a good idea. However, it will not solve the problem at hand.”
An anonymous bank CEO shared the insight in a chat. The congested channels are not the genesis of the chaos. The naira redesign puzzle and the policy somersault are the architects of the present predicament that has engulfed the country like dark smoke. All other brouhaha is in it.
On the one hand
Recent data from the Nigeria Inter-Bank Settlement Systems (NIBSS) shows that Nigeria’s mobile transactions are worth N2.37 trillion as of January 2023. This is a 125% increase over that of January 2022. In addition, the volume of mobile transactions has increased by 55% year-on-year to 108.1 million.
This is compared to 32.6 million transactions in January 2022. The value of NIBSS Instant Payments (NIP) has increased by 46% to N38.77 trillion in January 2023. It climbed from N26.65 trillion.
In the same month, PoS transactions increased by 41% to N807.16 (in 2022, it was N573.7) billion. However, the obesity of these transactions has exposed the paucity of the banks’ infrastructure. No doubt.
The cash shortage has forced more Nigerians to use alternative channels via mobile banking, ATM, internet banking, USSD, NIP and Pos. Well, scratched on the surface, all these channels bled to death. The management of the banks has risen in defence of this demise. However, with hindsight, if half of an estimated 35 million GTB customers log into GTB e-channels simultaneously in a day, the platforms will break down. No question.
On the other hand
A statement from the Association of Corporate Affairs Managers of Banks read, inter alia that “Nigerian banks have invested an estimated N100 billion in setting up, and maintaining cutting-edge e-channels over the past few years.” Kindly note. This investment covers internet banking, mobile apps, ATMs, PoS merchants, USSD codes, and digital franchises etc.
The limited edition of the Lamborghini Urus model costs $5 million. It has a speed limit of 305 km/p. It is good to own. It will sit pretty in your garage. However, a Lamborghini will not lift the weight. The banks’ Lamborghini-priced infrastructures lack the capability of a Bus Rapid Transit (BRT) commercial vehicle.
A BRT will ferry about 500 passengers in a daily commute and still maintain its speed. Stacked with a 40-foot container load, a Lamborghini will flatten like cardboard. That is why banks’ infrastructure collapsed. The banks must expand their infrastructure capacity to accommodate at least 35 million customers who want to use cashless transactions.
Nigerians have experienced excruciating delays in the last three weeks with mobile and internet transactions. This was evident in a deluge of unsuccessful debited transfers. The inability to access bank mobile applications compounded this experience. The network capitulation worsened it. This is because the banks would not pay cash across the counters.
Further research shows that increased usage, indeed, caused frequent downtime in banks’ online platforms. These platforms have never witnessed such an unprecedented surge! The available best option for the platforms was to shut down.
The Chairman of the Association of Licensed Telecommunication Operators of Nigeria (ALTON), Engr. Gbenga Adebayo, said the current difficulties in using the USSD codes for transactions are unconnected with the debts by the banks. The experience has overwhelmed the banks. “Perhaps,” he said, “their systems are not dimensioned to withstand the pressure they are experiencing.”
Such a heavy daily demand on the banks’ infrastructure for two weeks will overwhelm even the infrastructure of J.P. Morgan! This unexpected weight will crash a Lamborghini car. The majority of the infrastructure of banks and Fintech is insufficient to handle the sheer volume of traffic experienced in the last two weeks. What is the bottom line? All financial institutions must strengthen their e-payment platforms.
In the short term
I spent two hours in a bank as a visitor. I had driven my wife to collect her debit card.
Did you collect the card?
The card story is for another day. However, what was evident is that Nigerians and Fintech have been overwhelmed. Therefore, patience is thin.
Fintech is injured.
