A recent report from KPMG, titled “In Pursuit of Value,” reveals a significant decline in the weekly usage of Automated Teller Machines (ATMs) in Nigeria, dropping from 70% to 40%. The scarcity of Naira in circulation is cited as the primary reason for the decline, with many bank ATM stands regularly experiencing the unavailability of cash.
The report is based on surveys conducted with customers of Nigerian and Ghanaian banks, sharing their experiences during 2023. It notes that the reduction in ATM usage coincides with a notable rise in agency banking usage, with six out of ten customers now frequenting bank agents every week.
The report highlights a shift in customer preferences towards readily available cash options, emphasising the popularity of bank agents across the nation. The rise in agency banking is seen as a response to the cash crunch caused by the Central Bank of Nigeria’s (CBN) naira redesign policy in the first quarter of 2023.
The CBN’s initiative to overhaul the naira aimed to regulate cash circulation and promote cashless transactions. However, the poorly implemented policy resulted in a decline in economic activities, leading to challenges and inconveniences for Nigerians.
The report also notes a significant increase in digital payments, rising by 52% between January and October 2023, according to data from the Nigeria Inter-Bank Settlement System (NIBSS). The surge in digital payments is attributed to the cash crunch caused by the naira redesign policy.
The rise in digital payments overwhelmed Tier-1 banks, leading to multiple cases of transaction failures. Fintech companies, however, rose to the challenge, prompting a noteworthy change in customers’ preferences. The survey indicates that 58% of respondents switched banks or moved to fintechs during the period, reflecting a radical shift from the 15% who switched banks in 2022.
Approximately 13% of retail banking respondents now rely on fintech for their primary banking needs, compared to the 4% who made the switch in 2022. The report underscores the evolving landscape of financial services in Nigeria, with fintechs gaining ground amid changing customer behaviours and challenges in traditional banking services.