Downtime at the banks

Despite huge investments in information technology infrastructure by banks, it is disheartening that incessant downtime has become a norm in the banking industry. Hardly any week passes without banks experiencing downtime and connectivity problems either between their head offices and branches or between banks and the clearing house.

This has left customers with bitter experiences as an average of two to three hours is spent anytime they want to access their cash with the banks. What is more worrisome is that such incidents are not isolated tojust a few banks. Market watchers see some banks capitalizing on this to hide their illiquidity challenges, occasioned by the recent hike in the cash reserve ratio on public sector funds. Banks, however, continue to justify the development, attributing it to connectivity glitches between their gateway and the clearing house.

If it is not checked, whatever the reasons for the systemic downtimes, it is capable of eroding achievements recorded so far by the cashless policy of the Central Bank of Nigeria. Take, for instance, the reduction in money in circulation based on CBN’s current economic report.

According to the report for August, key monetary aggregate decelerated at the end of August 2013. On a month-on-month basis, M2 fell by 1.3 per cent to N1, 443.34 billion, in contrast to an increase of 2.2 and 0.4 percent at the end of the July and August 2012, respectively. M2, also known as broad money, is short-term time deposits in banks and 24-hour money market funds plus MI, that is, coins and notes in circulation and other money equivalents that are easily convertible into cash.

The Nigerian National Broadband Plan (2013-2018) will play a vital role in fixing these technical glitches. The broadband plan is aimed at making Nigeria one of the world’s leading economies by year 2020 with high-speed broadband networks that will provide every Nigerian with fast, reliable and affordable internet access. This is so because broadband is a transformative technology that levels the playing field and gives businesses access to regional, national, and international markets irrespective of geographical location.

Apart from quantitative indicators, a number of qualitative indicators such as class and quality of service are now associated with broadband definitions and cover applications and services that are uniquely made possible only by broadband technology, as well as the likely impact broadband could have on socioeconomic development and the well being of the citizens generally.

Similarly, the cashless policy is to make customers avail themselves of cash anytime through multichannel such as point of sale terminals, Automated Teller machines, (ATMs), among others, thereby discouraging carrying of physical cash. But, recent events have shown customers are yet to enjoy the full benefits of some of these policies.

To ensure the customers embrace the cashless policy, banks too have to take decisive steps such as sharing services. We are at a loss over the efficacy of the shared services campaign by CBN. The campaign which urged banks to leverage upon and pool resources together to acquire IT infrastructure for efficiency in operations is yet to gain traction. The development is at variance with the broadband policy of the federal government which aims to make the economy among the top 20 economies in the world through provision of fast and reliable internet services, including transfers and access to cash by customers.

Regulation may have to attach a penalty to obvious poor customer services. And rather than blame system failure, banks can learn from serious Nigerian manufacturers whose factories cannot afford downtimes. Otherwise customers, especially the unbanked, and others who don’t feel they get value for their time will move their money to another bank: their mattresses.

Source: BusinessDay