58% Nigerians Dump Traditional Banks for FinTechs – KPMG
The growth witnessed by some major payment service firms such as Opay, Palmpay and Moniepoint due to the scarcity created by the CBN policy on naira enabled the switch. A fresh report has indicated...
The growth witnessed by some major payment service firms such as Opay, Palmpay and Moniepoint due to the scarcity created by the CBN policy on naira enabled the switch.
A fresh report has indicated an increase in the adoption of Fintech services by Nigerians in 2023 owing to the glitches experienced by major banks during the cash crunch period.
The report published by KPMG and titled ‘In Pursuit of Value’ explored parallels across the Nigerian and Ghana financial markets such as the increased digital adoption, high mobile money penetration in Ghana and the growing role of Fintechs in the Nigerian banking landscape.
The report noted “In Nigeria, the cash crunch that characterised the banking landscape and wider economy triggered significant downtimes and deterioration of banking service levels”
“At the time, there were concerns about the potential long-term impact on trust in the industry and the implications for financial inclusion. However, our research does not suggest that this concern has not materialised to date. Instead, we observed a significant shift from ATMs to agency banking.”
The survey revealed that 58% of respondents dumped their banks and switched allegiance to Fintechs during the period, a sharp increase from the figures reported in 2022 where just about 15% reported a switch from banks to Fintechs.
The report also noted a surge in digital payments, marking a notable 52% increase in total NIBSS Instant Payment (NIP) transactions by October 2023 compared to January of the same year.
The accelerated usage of Fintechs characterised by the growth witnessed by some major payment service firms such as Opay, Palmpay and Moniepoint due to the scarcity created by the CBN policy on naira enabled the switch as reported during the survey.
The effects of the cash crunch was further felt in the weekly usage of Automated Teller Machines (ATM) during the period as the report noted a drop in the number of functional dispensing machines from 70% in the past few years to 40% in 2023.
“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 usage coincides with a significant rise in agency banking usage, with six in ten customers frequenting bank agents every week”, the report said.
Meanwhile, the report pointed out the need for banks to address some notable feedback from customers which include elevated agent fees, unresolved payment issues, and subpar customer service at these agent locations
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