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Tuesday, 22 October 2013
Customers groan as banks grapple with IT challenges
Despite huge investments in information technology (IT) infrastructure, incessant downtime has become a norm in the Nigerian banking industry, BusinessDay investigations have shown.
Hardly any week passes without banks experiencing downtime and connectivity problems either between the head offices and branches or between banks and the clearing house, leaving customers with bitter experiences as average of two to three hours are spent anytime they want to access cash or transfer funds.
The major part of yesterday witnessed downtime as most customers were stranded at most of bank branches visited by BusinessDay in Lagos.
A source in one of the affected financial institutions told BusinessDay that connectivity issues from the bank’s gateway to the clearing house were the sole reason for the downtime.
Market watchers are at a loss over the efficacy of the shared services campaign by the Central Bank of Nigeria (CBN), which banks were expected to leverage upon and pool resources to acquire IT infrastructure for efficiency in operations.
Consequently, there was heavy traffic as some of their customers could not get accounts confirmed and make third-party withdrawals. One of the customers at a tier-one bank who tried to confirm a number of cheques with the bank could not do so because of system breakdown. “The server is down,” said one of the bank’s staff.
Another customer said, “I want to deposit cheque into somebody’s account with the bank, up till now the money has not left my account to that account.”
At 11.45 am, a customer who deposited some cheques at a tier-two bank could not cash it as at 3.00 pm. One of the bank’s staff explained that the network was slow but did not know when it would be restored.
Further investigations showed that the development is providing auspicious time for some bank staff to perpetrate frauds and forgeries as such cases are usually written off to avoid sanctions by the CBN, while the culprits are dismissed quietly.
For instance, according to the 2012 annual reports and accounts of the Nigeria Deposit Insurance Corporation (NDIC), the sector recorded 3,380 fraud cases involving the sum of N17.97 billion in the 2012 fiscal year.
In the report, the corporation said of the N17.97 billion, the contingent or expected loss stood at N4.52 billion.
The expected/contingent loss, it said, had increased by N455 million or 10 percent as against the N4.072 billion reported in 2011.
Some analysts who spoke with BusinessDay last night urged CBN to wade into the incessant breakdown as most banks are suffering from liquidity crisis but hiding under the ‘downtime’ to cover their shortcomings. The implication, according to them, is that less funds will be available for onward lending to the cash-strapped real sector.
According to the latest CBN economic report for August, key monetary aggregate decelerated at the end of August 2013. On month-on-month basis, broad money (M2 ) fell by 1.3 percent.
CBN said that the development reflected largely the decline of 4.6 percent in the domestic credit (net) of the banking sector which more than off-set the 0.9 and 4.5 percent growth in foreign assets (net) and other assets (net) of the banking system, respectively.
Similarly, narrow money (M1) fell by 3.9 percent, compared with the decline of 6.0 and 2.5 percent at the end of the preceding month and the corresponding period of 2012, respectively. The development was attributed wholly to the 4.9 percent decline in its demand deposit component. Over the level at end-December 2012, M2 and M1 contracted by 5.6 and 15.5 percent, respectively.
While M1, also called narrow money, normally include coins and notes in circulation and other money equivalents that are easily convertible into cash, M2 includes M1 plus short-term time deposits in banks and 24-hour money market funds.