Gone are the days when not a few digital banks in Nigeria were highly rated by customers to be the best compared to traditional banks, by virtue of the low fees, convenience and, most of all, a seamless Internet-based experience they offered.
The seamless services offered by digital banks were very obvious, that experts in the finance sector of the economy concurred that digital banks have increasingly been challenging traditional brick-and-mortar banks throughout the world, including Nigeria.
Unfortunately, owing to the Central Bank of Nigeria’s cashless policy implementation, Nigerians have continued to lament failed digital banking transactions, so much that financial experts, economic groups and many other Nigerians have not hidden their disdain for the chaotic implementation of the policy. This compelled the Nigerian Economic Summit Group, Lagos Chamber of Commerce and Industry and the Centre for the Promotion of Private Enterprise to conclude that the country’s banking system, from unfolding realities, is ill-prepared for a cashless policy.
Digital banking in Nigeria
Digital banking, which is also known as online banking, allows a user to conduct financial transactions through the Internet. It is also known as Internet banking or web banking.
Digital banking offers customers almost every service traditionally available through a local branch including deposits, transfers and bill payments. Virtually every banking institution has some form of online banking, available.
Top digital banks in Nigeria
Leading digital banks in Nigeria include Opay, Palmpay, Smartsaver, PiggyVest, Cowriewise, Carbon, Kuda and Eyowo. The list also includes Alladin, V Bank, SumoTrust, Jetseed, Rubies, ALAT, GoMoney, Mint, Koloplay and Sparkle.
As gathered, Opay is committed to deepening financial inclusion through technology and enabling shared prosperity, and it is more than a payment company as testified by not a few users, as it was rated to be beyond banking.
OPay is a one-stop mobile-based platform for payments, transfers, loans, savings and other essential services. Over 18m registered users and 500,000 agents in Nigeria rely on OPay’s services to send and receive money, pay bills, and many more.
OPay Digital Services Limited is a company founded by Opera Norway AS Group, with footprints in emerging markets across Asia, Africa and Latin American countries.
SmartSaver takes pride in its multi-dimensional, unique products and services, including helping its users build their networth over time with a particular product, Guaranteed Investment Savings, coupled with an extraordinary 25 per cent yearly interest on personalised savings. It also allows users to collect loans with no collateral, handle bill payments and make transfers on their secured app. With its launch in 2017, the platform has served millions of Nigerians and continues to impress and add to its reputation as Nigeria’s top digital bank.
PalmPay on its own is a fintech innovator that aims to make digital payment more accessible and flexible for consumers and merchants. We improve users’ digital payment experiences by offering instant financial account creation, money transfers, and bill payments.
Since launching in 2019, PalmPay has quickly established itself as one of the continent’s leading and fastest-growing payment providers with 10 million users and a mobile money agent network of 200,000.
PalmPay raised a US$100 million Series A round of funding in August 2021, with US$140 million raised in total. The company is now operating in Nigeria and Ghana and will be scaling its proposition in other African markets in 2022.
Groaning under poor service network
Disappointedly, despite the supposed seamless services rendered by digital banks, consumers have continued to groan over poor service networks.
The customers have, each passing day, been expressing frustration and disappointment over the poor Internet services of virtually all the digital banks since the cash crunch occasioned by the implementation of the cashless policy by the CBN, causing a lull in business transactions.
Some of these customers, who spoke to Financial Street, specifically mentioned the difficulties they experience during the use of mobile banking apps that are unarguably worsened by slow Internet.
Speaking under anonymity, a female digital bank user said she had spent almost the whole day trying to transfer money to her daughter in one of Nigeria’s federal universities, as she continued to experience failed transactions.
She is not alone in the lamentation on unsuccessful cashless transactions due to failed mobile networks amid the biting scarcity of Naira notes. Others recounted that after several days or weeks, some of the mobile bank transactions for payments had yet to be delivered and the monies had yet to be reverted as at the time of narrating their sad experiences.
More than ever, most families’ savings are trapped in the bank, as the Naira swap policy has plunged the country into a seemingly endless cash crunch due to insufficient new banknotes.
For Kingsley Ighomor, the shortage of cash means that even basics like food and medicine are being trimmed.
He said,, “One day, the family had to go to bed on empty stomach. We usually eat three square meals, but on that particular day, we and the children had to sleep on empty stomach because we could not buy food .”
Fears digital banks
As it is said in Christendom, “Do not give the devil a foothold,” not a few digital banks in Nigeria, particularly amid the cash crunch, have literally given the devil a foothold, so much that they were, as alleged in the Fintech space, being used in perpetrating fraud.
A viral story credited to on AbdulMumin claimed that the CBN was about to suspend accounts of the Fintech companies because they were being used to perpetrate fraud.
The rumour partly reads, “Please, if you are using Opay, Palmpay or any of these China Apps or their Point os Sale machines, stop keeping much money in the account or stop using them. The CBN is about suspending their accounts because these apps are being used to perpetrate fraud.”
However, the CBN refuted the reports, describing them as fake news.
According to the News Agency of Nigeria, the Acting Director, Corporate Communications, CBN, Isa AbdulMumin, on Friday, March 24, 2023, in Abuja, said that the viral news “is simply fake.”
This served a little elixir in the mind of the digital bank users, who likened them to the infamous, deposit-doubling MMM that was “doing well” until the customers woke up one morning to the news that the platform had parked up.
Still, optimistic digital bank patrons believe that the “huge” loans given out by the banks will pin the financial institutions down, as they will not like to abandon such monies.
Whether the online banks are in Nigeria to stay is still hanging in the balance.