Post-Lockdown Bank Rush in Lagos Reveals Low Adoption of Digital Solutions in Banking


After five weeks of lockdown, Lagosians returned to the streets yesterday as the partial lockdown order by the Federal and State governments went into place.

Despite admonitions that social distancing should be strictly observed by residents, the reverse turned out to be the case in most areas. Bus parks in most parts of the states were filled, streets saw hoards of people moving to get to their places of businesses, and banks saw massive numbers of people trying to get in.

Post-Lockdown Rush or Just Another Normal Day at Work?

During the course of the lockdown, only essential services were exempted from staying at home. This includes healthcare institutions, stores and companies manufacturing and selling essential items such as groceries and medicine, telecommunications, media and logistics companies.

With banks and other financial service providers excluded, many had to turn to online channels and ATM spots to carry out their activities. With the resumption of normal activities on Monday, many rushed to the physical bank locations ostensibly to carry out pending transactions.

Post-Lockdown Bank Rush in Lagos Reveals Low Adoption Rate of Digital Solutions in Banking
The crowd at a bank in Lagos yesterday. Source: Twitter

But there was another hindrance. The Lagos state government’s guideline stipulates that banks are to operate with a maximum staff strength of 60% and be opened between 9 am and 3 pm (as opposed to the 8 am- 5 pm).

This meant that banks had to operate at less than 100% strength, with shorter time to deliver, while trying to ensure social distancing in the halls, leaving many people outside and unattended to.

Beyond the obvious problem of what could be a severe outbreak of the COVID-19 in coming weeks, the situation also indicated the gap in digital banking offerings by most banks.

How ‘Digital’ is the Digital Banking System?

David, a bank user needed to make a transfer during the lockdown. But he was unable to use his bank app or USSD code. He had to use his PiggyVest account to withdraw the cash from his account, then moved it to his other bank account, where he made the final transfer. This, of course, incurred more charges than it should have, had the first transfer gone through.

Like David, many people had urgent transactions they couldn’t do even with the digital banking system during the lockdown. But unlike David, not many others would be able to find their way around it or be willing to pay those extra charges.

Similar to these many had complaints and inquiries that required physical interaction with bank staffs as it couldn’t be completed online during the lockdown. This could include something as simple as debit card request or renewal.

These were the first set of the crowd at banks yesterday. The other set includes those for whom cash is still king. Home to over 20 million people, Lagos is Africa’s most populous city and Nigeria’s financial hub with a large number of its residents working in the cash-based informal sector.

For these people, cash transactions for business and other activities is the most trusted. For some others, they simply don’t just know how to use the mobile channels, assuming they even have the means. Thus, they need physical transactions which they could get at the bank.

According to NBS for Q3 2019, Lagos is still the most penetrated market for telcos with 16.87 million subscribers. If the nation’s biggest market for digital adoption still sees the majority of the users of its financial services visiting the banks, then there’s a big gap yet to be filled.

Fully digital banks like Kuda, Alat, Rubies and Vbank might claim to be solving this need but they are not reaching the unbanked. Rather they are providing alternative options for the already banked.

Impending Job Losses in the Banking Industry and the Digital Gap

The COVID-19 pandemic comes with several uncertainties for businesses as many will collapse or let go of their staffs. One of the most threatened industry is banks.

Already, some banks are letting go of their staff. Access bank for instance, in a leaked video, announced that it will have to let go of about 75% of its staff strength and close down some of its branches.

Although the Central Bank of Nigeria (CBN) has issued a circular that no bank should retrench any of its staffs during this pandemic, many bank staffs were employed through 3rd party agencies, so there’s still a chance they could be let go off.

The bigger question now is, are the available digital measures in place enough? Putting into consideration the potential and highly probable reduction in staff strength and infrastructure, will it be enough to handle the customer base that still needs physical interactions to get transactions done?

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