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According to a recent survey report by KPMG titled “In Pursuit Value,” the frequency of weekly ATM usage among Nigerians has seen a significant decrease, dropping from 70% in previous years to 40% in 2023.
The study, which involved surveying customers of Nigerian and Ghanaian banks to gather their experiences throughout the year 2023, highlighted the decline in ATM usage in Nigeria. This decline is attributed to the consistent unavailability of cash at many ATM stations.
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The report also pointed out that medium digital transactions, which were previously ranked among the top in the survey, have now fallen outside the top ten.
Specifically, the report states, “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.”
Additionally, the rise in agency banking emphasizes the ongoing preference for cash, indicating customers’ desire for more accessible cash options. This trend is largely driven by the popularity of bank agents across the nation.
The survey further observed a 52% increase in digital payments between January and October 2023, based on data from the Nigeria Inter-Bank Settlement System (NIBSS). This surge in digital payments was triggered by a cash shortage resulting from the Central Bank of Nigeria’s naira redesign policy in the first quarter of 2023. The report explains, “Consequently, digital payments surged, marking a notable 52% increase in total NIBSS Instant Payment (NIP) transactions by October 2023 compared to January of the same year.”
Furthermore, the rise in digital payments led to challenges for Tier-1 banks, with numerous cases of transaction failures. However, fintech companies such as Opay, PalmPay, and Moniepoint successfully adapted to meet customer demands, resulting in a substantial shift in preferences.
The survey indicates that 58% of respondents switched banks or opted for fintech solutions during this period, representing a significant increase from the 15% who made such switches in 2022. Additionally, around 13% of retail banking respondents now rely on fintech for their primary banking needs, marking a considerable rise from the 4% recorded in 2022.
This shift in consumer behavior signifies a notable transformation in the financial landscape. Fintech companies have seized the opportunity created by the surge in digital payments, offering agile and innovative solutions that address the evolving needs of customers. The report underscores that the increased reliance on fintech options has led to a radical departure from traditional banking practices.
The challenges faced by Tier-1 banks due to the surge in digital payments, including transaction failures, have prompted a reconsideration of customer loyalties. The report highlights that 58% of respondents actively switched banks or embraced fintech alternatives during this period. This is a substantial departure from the relatively modest 15% recorded in 2022, suggesting a growing awareness and acceptance of the advantages offered by fintech solutions.
Furthermore, the survey brings attention to the fact that approximately 13% of retail banking respondents now consider fintech as their primary banking solution, marking a significant increase from the 4% reported in 2022. This underscores the evolving role of fintech in meeting the diverse financial needs of consumers, especially as digital payments continue to gain traction.
In conclusion, the KPMG report paints a dynamic picture of the financial landscape in Nigeria, with a noteworthy decline in ATM usage driven by cash unavailability, a surge in digital payments triggered by regulatory changes, and a substantial shift towards fintech solutions.
This transformation signals a fundamental change in the way Nigerians approach banking and payments, reflecting a growing reliance on digital and agile financial services. As technology continues to play a pivotal role in shaping the financial sector, the report suggests that the industry must adapt to meet the changing preferences and expectations of consumers.
