Fintech chiefs on ATM slow walk

EXPERTS IN THE FINANCIAL and fintech industry have decried too many factors working against deployment of automated teller machines (ATMs) across Nigeria to meet the financial inclusion drive of the country. They have identified stiff regulations ....

EXPERTS IN THE FINANCIAL and fintech industry have decried too many factors working against deployment of automated teller machines (ATMs) across Nigeria to meet the financial inclusion drive of the country.

They have identified stiff regulations, forex cost increase impacts on cost of ATM acquisition, Central Bank of Nigeria’s (CBN) regulations on end-user fee, increasing cost of power at offsite locations and high offsite rental as some of the problems being faced in the space.

In addition to this, they again recognized merger and acquisition among banks and CBN’s regulations requiring banks to seek specific approval prior to offsite ATM deployment or relocation as other bottlenecks that must be removed in the industry.

As they brainstormed recently at the second Series of Fintech1000+ Special Webinar themed: “Future for ATMs In Nigeria - Death Or Resurgence” to chart a way forward, their consensus tilted towards the need to remove regulatory obstacles especially as applied to deploying offsite machines.

According to the pundits, as more bank branches are closed down across the country, ATM remains the viable channel that can serve as alternative means of serving the mushrooming banked population in the country, if properly harnessed.

Particularly, they noted that deploying off-site ATMs requires getting approval from the CBN, a process they claim takes up to six months some times, thereby creating serious obstacles for operators and loss of appetite for investors.

They criticized this regumillion more given that deployment of Point of Sales (PoS) and agent banking services is not required to go through the same process.

One of the participants and head, e-channel services at FirstBank, Bob Nwojo, said that the use of ATM has continued to evolve and it has continued to find application in meeting daily cash and non-cash transactions by Nigerians.

He however noted that Nigeria is far behind even as the global ATM market, which accounted for $18.44 billion in 2018, is expected to grow at CAGR of 10.4 per cent over the forecast period 2019-2022 to account for $44.18 billion by 2027.

According to him, ATM should become the bank of the future as more bank branches close, and that the teller machines will adopt biometrics identifiers like fingerprint and facial recognition to enable cardless usages and more sophisticated functions.

He further said that already, experts have recognized that cash machines are crucial to the lives of consumers and still offer essential services, adding that the ATM channel ‘remains the primary, most convenient and most reliable way to retrieve cash’.

In Nwojo’s comparison, “Brazil has 211 million population; 106.7 ATM per 100,000 adults; 19.2 bank branches per 100,000 adults and a total ATM base of 172,600 in 2019. South Africa has 58 million population, ATM per 100,000 adults is 67.3; bank branches per 100k adults stood at 17.3 and total ATM base in 2019 was 30,000.

“India has 1.3 billion population and ATM per 100,000 adult is 22 while bank branches per 100,000 adults stood at 16.8 and total ATM base in 2019 was 238,000.

However, Nigeria which hosts a population of 200 people has 16.3 ATMs to serve every 100,000 and 4.4 bank branches to serve every 100,000 adults as the country’s ATM base as at the end of 2019 stood at 18,731.

Nwojo continued, “With three times the population of South Africa, Nigeria’s total ATM/100,000 adults is four times less than that of South Africa. With similar population figures, Brazil has nearly 10 times the number of ATMs than Nigeria and over four times the number of branches per 100,000 customers.”

In his contribution, Tope Dare, executive director, sales and strategy, at Inlaks, decried the high cost of transferring ATMs by dealers which according to him is discouraging for independent deployers.

He also spoke to the need for the apex bank to restructure end-user fee to favour operators as he lamented that they, on many occasions run some of the machines, especially those in remote areas at a loss.

Akeem Lawal, divisional chief executive officer, Interswitch Group, also laid emphasis on meeting the three criteria of evolving needs, interoperability and lucrative economics for playlation ers if the country must drive ATM penetration deeper for financial inclusion.

Speaking on the need for the government to step in and alleviate some of the challenges, Tope Dare recommended that reward and intervention fund should be given to banks deploying ATMs in remote areas.

“Certified ATM service providers like the PTSP and PoS to guarantee quality service and security to banks and customers; financial support programmes to be extended to the ATM channel given its key roles in financial inclusion success; and giving FX to ATM importers at CBN rate as well as lowering customs and excise duty on key inputs to financial inclusion such as ATMs PoS terminal, among others are desirable,” he said.

Should the government fail to wade in and arrest the situation, the experts warned that Nigerians should expect to deal in the future with longer queues at financial institutions; no social distancing in the era of Covid-19; longer period to achieve financial inclusion goals; slower growth of financial services industry and slower financial technology adoption such as fingerprint, NFC and QR code banking.