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A new insight was at the weekend given to the low level of investment in branches by Nigerian banks as fresh findings have shown that about 80 percent bank transactions these days are done online.
THISDAY checks from industry operators last week showed the changing trend as most bank users now prefer to transact their banking activities outside the banking hall.
It was gathered that as customers traffic to the banks experience a sharp reduction, the managements of the various banks seemed to have come to terms with the reality of the need to strengthen their online medium, a development said to have led to the upgrade of their electronic platforms and a corresponding cut in the budget for new branches.
Managing Director, Enterprise Bank Limited, Mallam Ahmed Kuru, who confirmed the development, said the trend in the industry now is such that favours investment in electronic platforms, given the fact that many bank customers do not want to come to the banking hall these days.
Using Enterprise Bank as an example, he said it is no longer the priority of the bank to invest in new branches since about 80 percent of transactions are now done through telephone although he said this does not affect the plan to open additional five branches of the bank where it hitherto does not have offices.
According to Kuru, who said the era of competition for large branches is over in the industry, Enterprise only agreed to register its presence in new locations for strategic reasons and not because it wants to compete with other banks, which boast of large number of branches.
“So we are investing on infrastructure in order to compete favourably and not on mortar and bricks as it used to be the norm in the past. We will invest in Internet, ATM and all other elements of mobile banking. If you travel abroad, hardly will you find the kind of banking hall we have in Nigeria. All you see is a small place where transactions are carried out. It may be a small place but the volume of the transactions there is huge.
“Today, you want to stay in the comfort of your office and make transactions. You want to go to the ATM and withdraw N100, 000. You don’t want to go inside the banking hall with your tie and start counting cash and with the agent banking coming up, most of the transactions will be done outside the banking hall,” he said.
One category of banks, which have had to close some of its branches, includes some of the new emerging banks, which recapitalised and acquired five of the banks that failed the 2009 audit jointly conducted by the CBN and the Nigeria Deposit Insurance Corporation (NDIC).
Another group is made up of some of the top players in the industry, which decided to prune their branches in view of the deployment of e-payment channels in the Nigerian banking industry.
The third category, however, is made up of some of the old generation banks, which have had branches in several rural communities in the country for decades but are now being forced to rationalise some of these branches that are either not viable or too costly to run.
CBN Deputy Governor, Operational Directorate, Tunde Lemo, had in an interview with THISDAY last year explained that it is not a crime for banks to close their unviable branches since commercial banks are business enterprises, which have to yield returns to shareholders.
He explained that failure to respond to the reality might make the banks incur losses. He said that was the reason why the apex bank decided to provide alternative means of payment in the system. “For example in a community where there are branches of eight different banks, it will be wise for any of them to close shop there and concentrate in other viable locations with the presence of a fewer number of bank branches,” he said.