Who is banking online?

Banks are investing heavily on IT but only a small fraction of their customers have caught the drift in a cash-centred economy. SEGUN ORUAME

 Banks are increasingly getting wired but it would appear a large percentage of banks’ customers still prefer to do their banking business behind the counter. Despite heavy investment on IT to hasten the transaction process, the queues are not fading away inside the banking halls. Even in cities such as Lagos and Port Harcourt where virtually all banks have deplored considerable IT infrastructures to shorten the time spent inside their halls, crowd scenes are still common features particularly at month’s end when most salary workers go to make withdrawals. These are periods when simple transactions not exceeding N2000 could take hours to do making both customers and bank officials to become edgy as the queues steadily increase by the minutes. Banks blame it on an unyielding cash culture and the reluctance of most customers to try out the new ways of banking.

Only a tiny fraction of customers are taking good advantage of the technology-driven services of their banks. For majority, banking operations remain the same: go to the bank where you opened your account, join the queue and withdraw or save money. As one customer of the United Bank for Africa, Anthony Branch, Lagos, put it, “What is my business with SMS or Internet to get my money?”  His question reflects the general attitude of a high percentage of banks’ customers who still see little use the heavy investment in technology by their banks can offer them in terms of more secured and faster transactions. Senior company official of eTranzact Benjamin Akinteye thinks novelty of the new banking suites tended to overawe rather than interest customers who are largely technologically illiterates. Such people are not expected to embrace a thing they have little understanding of. Besides, in a cash-centred culture where frequent cases of dud cheques have forced many people to go for cash and nothing more in any transactions, electronic cash transactions as offered by banks, would be eyed with suspicion.

His words: “It bothers on the novelty of the solution.  You will agree with me that technologically, most Nigerians are illiterates and when it comes to IT, the degree of digital literacy is worse.  Even those that are supposed to know don't know.  Then, we already have a culture which is predominately cash based. To think that what is done in cash hitherto, can now be done electronically is something that cannot be conceived by so many people.  Because hitherto, all alternatives to cash that they know are not actually foolproof, take for instance cheques, most Nigerians don't have faith in cheques because the law against dud cheques has not been fully enforced so most people are in the habit of issuing dud cheques. When someone gives you a check, you are still not comfortable that it may not bounce. For even decision makers, trying out something new is pretty tough. Habits die hard.” 

In the last few years, fiery competition resulting from the entry of newly licensed banks and increasing sophistication of corporate customers have forced most banks, particularly privately owned banks, to introduce innovative changes to win new customers and retain old ones. Now, banking operations feature novel services such as SMS banking, an off-shoot of telephone banking, online banking, voicemail or voice-activated banking and the likes. Banks have made heavy investment on technology to drive the new market mantra of ‘one branch banking’ but it would appear old habits are stalling banks’ desire to have majority of their customers move with the speed with which they (banks) are changing. “You cannot change people or institutions overnight,” said Evans Woherem, executive director and head of IT at First Bank Plc.

First Bank, though not an early convert of technology banking, had since it embraced the new trend invested massively in IT and to date have over 120 of its about 350 branches nationwide wired into a single branch network. It had been left on the trail by early technology runners and younger organisations such as First Atlantic Bank, Oceanic Bank, Standard Trust Bank, Guaranty Trust Bank and Zenith Bank. But the country’s oldest bank with the largest branch network had since taken over to occupy the top spot as the bank with the highest number of branches that are wired to allow customers do seamless and synchronized banking transactions irrespective of their locations and where their original accounts are domiciled.

The snag is most customers appear ignorant of the new wave of opportunities for secured and faster transactions offered by their banks including First Bank. While banks are embracing technological changes, their customers seem skeptical and wary of embracing the changes.  At the Ijora branch of one of the country’s leading banks, month ends are periods when most workers form long queues outside the bank before the official opening hours.  “Most customers are still reluctant to change with the tide. The big customers have been able to change and they hardly bother themselves coming here to do any transaction but the small customers who are often in the majority do not see any reason to go online and transfer money,” said one senior official of a Lagos based bank with branches in Abuja and Port Harcourt.

Deji Oguntonade, managing director of First Atlantic Online sees it in a similar manner but thinks it is not just a problem of individuals but of the institutions they work for. Most customers who are yet to be part of the change process in their banks would change if the institutions they work for or must deal with are ready to embrace the changes set by the banks. For instance, the West African Examination Council (WAEC) still pays its examiners and invigilators by open cheques. The result is majority of them flood the banks to claim the cash equivalent at about the same time making the banks and themselves vulnerable to attack by criminals. Most civil servants are yet to be educated on the several options available in making financial transactions and so they end up withdrawing money to pay into their thrift and cooperative societies within the same bank whereas the same payment could be made via the Internet or SMS platform by a simple click on the mouse or mobile handset. To Oguntonade, “Organisation can help to make individuals embrace these services when they adopt it as a standard means of transferring cash.”

Only a meagre percentage of bank customers, in some banks not up to 10 per cent, use the IT windows deployed by their banks to help them (customers) enjoy faster banking processes in more secured environments. While most customers are aware that their banks are online and they could make transfer or withdraw cash from anywhere, they would rather walk into the bank where their accounts are domiciled to make withdrawals or savings. One customer inside First Bank Plc, Oba Akran Way, expressed complete ignorance of the banks presence online. A Lagos civil servant, she was not aware that she could make withdrawal from the branch of the bank closer to her at Egbeda, a suburb of Lagos.

Another customer had never gone to the website of the bank and wondered why he needed to go to the site. One customer who had been operating a savings account with the bank for over six years thought the new “devices are only for current account holders and people with big money and not small account holders like us.” For a bank that had done heavy publicity on its Internet enablement in the last one year to press home its ‘one branch banking,’ it could only mean one thing: “People don’t believe a thing until they are compelled to believe or accept such things,” said one senior official of the First Bank at its Broad Street headquarters.

Interestingly, most customers of new generation banks which started the technology craze tend to be more aware of the technology driven services of their banks even when they hardly use them. It should not be surprising since such banks had anchored their aggressive fight for market share on technology which was not readily handy as at the time they were fighting the big brothers to grow their own client base. “We actually took over several accounts of the big ones because of innovative services which was just what those companies needed to solve their own internal financial challenges. Banks like ours forced First Bank to embrace technology,” said one senior official of Guaranty Trust Bank.

Most banks offer windows for Internet-centred banking that allows customers to check their account status online. They can also make transfer from one account to another, particularly if the accounts are within the same bank; for instance, from current to savings account or vise-visa. Some banks have additional features which allow customers to pay for services online and even pay for utilities. But these appear to be serving only a negligible percentage of banks’ customers, that is the nouveau riche or those who can afford to pay for their shopping at highbrow supermarkets by simply clicking on their accounts online or making the same payment from their mobile handsets.

Not-with-standing what Woherem considers as the necessary transition process in any period of change, there are several people who have come to depend entirely on the IT-led services of their banks. “I cannot imagine banking with some of these state-owned or community banks, how will they meet my needs who is always on the road,” one CEO of an IT start-up in Lagos asked. He recalled one late afternoon when his vehicle broke down at Ore on his way to Benin City. He had to spend the night at Ore when it was obvious that the mechanics would not be able to fix the problem before nightfall. His saving grace was his checkbook. Magnum Bank had a branch at Ore. He walked into the bank the next morning, handed over his check and “Just like that I got cash to pay those mechanic boys. Imagine if I had to leave the car behind and go back to Lagos to withdraw cash from one corner shop bank.”

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