By Chinwendu Obienyi
A report by KPMG Nigeria has revealed that about 58 per cent of Nigerians switched banks or moved to fintechs during the cash crunch period in the first half of 2023. The period also saw the rise in digital payments as many quickly switched to digital platforms.
The firm disclosed this in its recently released report titled; “In Pursuit Value” which surveyed customers of Nigerian and Ghanaian banks whilst curating their experiences last year.
This is no surprise owing to the increase witnessed in the adoption of fintech services by Nigerians. Fintech companies such as Opay, Palmpay and Moniepoint reportedly rose to the challenge, addressing issues like network glitches experienced by many commercial banks and causing a significant change in customers’ preferences.
The survey, quoting data obtained from Nigeria Inter-Bank Settlement System Plc, noted that payment via digital mediums rose by 52 per cent in 2023 between January and October 2023.
“Consequently, digital payments surged, marking a notable 52 per cent increase in total NIBSS Instant Payment (NIP) transactions by October 2023 compared to January of the same year. This was triggered by the Central Bank of Nigeria’s initiative to overhaul the Naira, aiming to regulate cash circulation and reduce reliance on physical currency”.
According to the survey, 58 per cent of respondents switched banks or had reasons to change to fintechs during the period. This presents a radical shift from the 15 per cent who switched banks in 2022. Also, around 13 per cent of retail banking respondents now rely on fintechs for their primary banking needs from the 4 per cent that made the switch in 2022.
The report further revealed that the weekly usage of Automated Teller Machines (ATMs) among Nigeria dropped from 70 per cent in the past few years to 40 per cent in 2023, owing to the unavailability of cash at many ATM stations.
According to the report, medium digital transactions dropped from the top to outside the top ten in the survey.
“Currently, four in ten customers report weekly ATM usage, a notable decline from the previous seven in ten over the last few years. This decline in ATM us-age coincides with a significant rise in agency banking usage, with six in ten customers frequenting bank agents every week”, the report said.
The report further noted that the rise in agency banking emphasizes the continued popularity of cash, underscoring customers’ quest for more readily available cash options, primarily driven by the popularity of bank agents across the nation.