Experts in Nigeria’s financial sector have envisaged further adoption of digital channels for monetary transactions as the new normal post-COVID-19, stressing the need for the sector to embrace and maximise the opportunity.
According to them, traditional financial institutions to a larger extent, should adopt the use of digital channels to serve their stakeholders better post-COVID-19, and design sustainable business models to enable them to manage disruptions, and make positive environmental, and social impacts.
Specifically, the President, Customer Awareness and Financial Enlightenment Initiative (CAFEI), ‘Debola Osibogun, said the surge of customers in banking halls immediately after the relaxation of the lockdown showed the low level of adoption of digital financial services by Nigerians.
According to her, this is a true reflection of how some customers find it difficult to trust digital banking, due to the increased volume of fraud on digital platforms and the inability of most financial institutions to mitigate these risks. She noted that to onboard financial services on digital platforms, there is a need for banks to continually invest in process integration that encompasses end-to-end digital service delivery, to continue the delivery of seamless services to their customers.
She maintained that digital financial services serve as a preventive measure in the light of the global pandemic by reducing cash handling, saying that this would be carried over by most of the banks customers’ post-COVID-19, and should be sustained by the banks.
Osibogun said the structure of Nigeria’s economy is dominated by the informal sector with contributions of over 60 per cent to the Gross Domestic Product (GDP), which are mostly cash-based transactions, and noted the need for critical awareness about digital financial services in the sector.
She stressed the need for collaborations among the sector stakeholders in building an inclusive financial ecosystem, saying it is vital to address the issue of trust in order to build confidence in the use of digital financial services and mobilise savings via digital platforms by designing products and services that appeal to customers.
In her remarks, former Chairman, Access Bank Plc, Mosun Belo-Olusoga, said the COVID-19 effect on the banking sector would lead to a restrain on banks’ financial performance, fall in Capital Adequacy Ratio, a decline in cash flow from loan repayment, and increased fraud and cyber threats as a result of relaxed internal control.
She said there would be undue pressure on bank customers who have embraced the use of digital platforms in carrying out financial transactions, as the telecommunication infrastructure in Nigeria is still poor, although most businesses have gone digital.
Speaking on the fate of the financial sector post-COVID-19, Vice Chairman, FMDQ Group, Jibril Aku, said the Nigerian economy is at the risk of another recession, and projected a new financial order. He identified the need for banks to increase investments in cybersecurity measures to cushion the rising rate of cyber threats, as more organisations and customers are adopting digital platforms for service delivery and transactions.
He admonished the banking sector to ensure the effective implementation of sustainable banking principles with a focus on economic, social, environmental, and governance issues to boost reputation capital and investor confidence.
Meanwhile, speaking on the way to go in embracing sustainability models post-COVID-19, Deputy Governor, CBN, Aisha Ahmad, said banks do not only need to make necessary changes but continually need to evolve and fortify their business models to adapt to evolving disruptions in the sector. She said the Banks are in a better position to weather the current storms facing the industry, noting that over 80 per cent of banks have incorporated sustainable banking principles in their models.
However, she said Banks and other financial institutions would fully survive the evolving disruptions if they completely embrace sustainability principles, which have become more critical given the significant impact of the COVID-19 pandemic ravaging the world. In his remarks, the Chief Executive Officer, Chartered Banker Institute, London, Simon Thompson, said the priorities of banks should change, as most policies now focus on health, and economic emergencies.