Commercial banks in Nigeria shut down 234 branches and 649 Automated Teller Machines (ATMs) in 2020, according to reports from the International Monetary Fund (IMF).
The global financial body disclosed this in its Financial Access Survey 2021 Trends and Developments.
According to details from the reports, the closure of banks and ATM service points across the country led to a 7% decline in the country’s Financial Access Score (FAS). Nigeria recorded a 4.44 score, down from the 4.78 it recorded in 2019.
The International Monetary Fund is known to utilize two FAS indicators to monitor Target 8.10 of the 2030 Sustainable Development Goals (SDGs). That SDG aims to increase domestic financial institutions’ capacity to promote access to banking and financial services.
The international institution disclosed that the number of commercial bank branches per 100,000 adults and the number of ATMs per 100,000 adults are the two commonly used FAS indicators.
The IMF report states that Nigeria experienced reductions in these two crucial FAS indicators as well as 12 other FAS indicators out of a total of 64 used.
The financial body stated that these reductions were due to a drop in the number of commercial bank branches in Nigeria, from 5,392 in 2019 to 5,158 in 2020.
Similarly, the fall in the number of bank branches led to a drop in the number of ATMs in Nigeria by 649, leading to an average of 18,810 ATMs in 2020 from 19,459 in 2019.
This also led to the country’s financial access score falling to 17.19 in 2020 from 16.14 in 2020 in terms of the number of ATMs per 100,000 adults.
Reasons why number of ATMs fell in 2020
According to the IMF, the figures recorded from the Financial Access Score for 2021 are a glimpse of what happened in terms of financial access during the pandemic.
Amidst other economic shocks, the devastating effects of the COVID-19 pandemic led to banks in Nigeria temporarily or permanently shutting down their branches as the virus forced people to remain indoors and adopt remote models.
The rapid reductions in bank branches and ATM points alike are also due to the rising use of digital and mobile banking solutions.
Instant payment annual statistics for 2020 released by the Nigerian Inter-Bank Settlement System (NIBSS) shows that mobile transactions in Nigeria (mobile & USSD) surged in 2020.
These payments witnessed an 82.6% growth at a transaction value of 1.69 billion compared to the 928.86 million they recorded in the previous year.
Point of Sale (POS) usage statistics from NIBSS also put the volume of POS transactions for 2020 at 77 million, a nearly 40% increase from the 46 million transactions recorded for 2019.
Basically, Nigerians are rapidly moving towards more contactless and digital modes of transaction and this is taking its toll on traditional banks. One of its effects is the declining number of bank branches and ATMs across the country.
As more digital and personalised financial services continue to spring up, more people would find less need to visit physical branches. Thus we could expect the number of ATMs to continue to drop.
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