COVID-19 pandemic has changed our lives forever. The way we interact and the way we conduct businesses, the way we communicate and commute will be changed forever. But the experts are not hopeful. The gloomy report by the McKinsey and Company Financial Services Practice of March 2020 says that the challenges before us are “immediate” with long-term implications for global, regional and “local economies and for the payments industry itself”. In fact, the socio-economic impact of COVID-19 on Nigerians and electronic banking will be thorough.
But as more Nigerians become aware of the need to keep safe by embracing hand wash, we will experience a significant leap in achieving a cashless society as Nigerians will consciously reduce the use of physical cash. Media reports have indicated that with the surge in the number of Nigerians that are being infected by the coronavirus daily, more bank accounts will be opened. There will be tangible investment by the banks to decongest the banking halls. The banks will adopt agent banking strategy to reach more people who are closer to their homes and places of business. This will welcome new converts who would ordinarily not touch e-payments because of fear of cyber-crime.
For instance, in Ghana, Ebow Quayson of Ghana Inter Payment System [GhIPS], equivalent of the Nigeria Inter-Bank Settlement System [NIBSS], says most banks have cancelled Saturday banking. The banks have revised their operational hours from 8 am to 5 pm, 9 am to 3 pm and 10 am to 4 pm respectively. There is a shift system in place to allow for social distancing. In the first quarter of 2020 alone, Quayson informs, the Ghana Instant Payment [GIP], similar to [NIP], transactions on mobile apps grew by approximately 700 per cent while in March that figure has shot up by 54 per cent.
During this pandemic, the Bank of Ghana [BoG] has formulated a policy to reduce fees for mobile money transactions. For instance, daily transaction limits has been revised upwards for debit cards on Point of Sale, online transactions and ATMs. Because of this new policy, new trends and customer behaviour have emerged. Quayson explains that there is an increased in the uptake in USSD and mobile app on Playstore and iOS. Some of the banks like Fidelity, Africa Development Bank and Ecobank among others have recorded more than 100,000 download.
The banks have tilted towards self-regulation. They have deployed more mobile apps, wallet-to-account and account-to-wallet transactions. As more companies are engaged in online and e-commerce services, this behaviour has led to an increase in the mobile money transactions by individuals, merchants and in adverts and campaigns by the banks, urging the public to use digital channels. To push electronic payment, Ghana has launched the Quick Response [QR] code in March.
In Kenya, Edwin Otieno, Head of Agent Banking, Kenya Central Bank [KCB] states in a presentation available to this writer that because of the pandemic, Kenya has re-negotiated its loan interest, reduced charges on low transaction amount over electronic money, cut charges on cash transfers between mobile network operators [MNOs] and the banks and sliced loans to customers. The KCB has also enhanced limits on mobile wallets. It has slowed expenditure on non-core items, cut inter-county movements and on disposable income. The country is now more reliance on electronic money because the future is uncertain.
However, the huge reliance on electronic banking has brought about an increase of 97 per cent transaction outside the bank branch. This has grown to 126 per cent in non-branch revenue to over 12 billion Kenyan shillings. In March 2020, Kenya witnessed a reduction in the bank teller transactions by 35 per cent. Therefore, there is a corresponding high in the number of online customers. This surge – and the fact government is making electronic payments through the banks – has forced Kenyan financial institutions to aggressively recruit more online customers. The banks have since recorded growth in electronic transactions on low-value purchases and a cut in loans through mobile loan app providers.
Similarly in Nigeria, Muyiwa Ebitanmi of Airtel says the pandemic has led to an increase in the adoption of USSD and mobile money channel for retail payment as government, non-governmental organisations and individuals favour these platforms for disbursements. Aside from this, Ebitanmi shares that another trend is the upswing adoption of telephone orders from Ebeano, Hubmart, Spar and other supermarkets. This trend has led to a sharp rise in online shopping. The Coronavirus has attracted more online donations, tithes and offerings for religious organisations.
Quayson, Otieno, Ebitanmi et al spoke at a webinar on the impact of COVID-19 on electronic banking in the Sub Sahara Africa organised by Inlaks recently. As the banks now run skeletal services in Nigeria, Ghana and Kenya, they will lose transactions. If the transactions are low, the revenue will below. It is economics. As such; the loss of physical banking is gain for electronic payment. Because of this transfer, there would be heavy demand on the electronic payment value chain suppliers such as the internet service providers, teleconferencing, virtual network providers etc. This period will test the reliability, availability and security of the banks’ ATMs, online platforms, mobile app etc.
However, electronic payment experts have warned that with the trend and growth in the online payment systems, we should expect a corresponding upsurge in the activities of cybercriminals. You know, cyber-criminals follow the cash. To ward off these thieves, the Central bank of Nigeria [CBN], KCB and BoG should tighten regulation on electronic transactions, improve access to data networks, license more data network providers and raise competition between the banks and MNOs. These actions will help the actors to turn the looming gloom into blooming boom, and in the process, modify our lives forever.