KPMG: Only 20% of Nigeria’s Population in Banking System

Notwithstanding the country’s position as Africa’s most populous country, KPMG has disclosed that only about 20 per cent of the population is banked.

The foremost audit, financial and tax advisory firm stated this in a report titled: ‘Africa Banking Industry Customer Satisfaction Survey,’ for April 2013, made available to THISDAY Tuesday.

It however stated that two-thirds of the country’s population “have never banked at all before.”
In a bid to increase access to financial services, the Central Bank of Nigeria (CBN) had last year launched the Financial Inclusion Strategy (FIS).

The FIS is a concerted attempt to increase access to a range of financial services such as payments, savings, and bring more people into the banking system. The apex bank had identified lack of access to financial services as a challenge to the country’s growth.

Continuing, the KPMG report pointed out that the Nigerian banking industry is made up of 20 banks with nearly 6,000 branches, most of which are concentrated in the urban areas. It also identified the concentration of banks in urban areas as a factor that contributes to the low level of banking penetration.

It explained: “Nigeria’s banking sector is expected to grow from about $117 billion in 2011 to more than $168 billion in 2015 (a CAGR of around 10 per cent). The sector has recently experienced a number of regulatory changes including a repeal of universal banking licenses and the promulgation of more stringent regulations by the country’s central bank which is aiming to reduce soaring books of non-performing loans and stamp out severe breaches of corporate governance.

“However, with the establishment of the Asset Management Corporation of Nigeria (AMCON) to purchase toxic assets of banks and recapitalise troubled banks, some stability has returned to the sector leading rating agency Standard & Poor’s (S&P) to upgrade the sector in 2012 to a positive outlook due to the country’s improved asset quality, capitalisation and corporate governance.”

With 77.9 per cent, the report ranked Guaranty Trust Bank Plc emerged top among the first 10 ‘Most Customer-focused Banks’ in the country. It was closely followed by Zenith Bank Plc with 77.7 per cent and Stanbic IBTC with 76.1 per cent. Others on the list were Diamond Bank (75.7 per cent), Fidelity Bank (75 per cent), Standard Chartered (74.8 per cent), First City Monument Bank Plc (74.4 per cent), Sterling Bank (73.9 per cent) and Access Bank (73.1 per cent).

“With ATMs becoming almost ubiquitous in Nigerian cities, it is not surprising that it has been the fastest growing channel in recent years. Almost eight in 10 customers surveyed use the ATM and nearly two thirds of these people visit an ATM on a weekly basis with cash withdrawal and balance enquiry amongst the most common transactions customers perform via the ATM.

“However, despite the proliferation of new channels in recent years, our findings show that adoption of other alternate channels is still comparatively low with very few respondents saying they use internet banking (7 per cent), Point of Sale (PoS) (6 per cent), telephone banking (5 per cent) and mobile payments (2 per cent),” it added.

Source: ThisDayLive