A recent report by KPMG titled “In Pursuit of Value” has unveiled a significant decline in Automated Teller Machine (ATM) usage, dropping from 70 percent to 40 percent weekly. The figures were derived from surveyed customers of Nigerian and Ghanaian banks, sharing their experiences throughout 2023. The scarcity of cash in circulation has been identified as a major factor contributing to this decline.
KPMG highlighted that the reduction in ATM usage correlates with the frequent unavailability of cash at many bank ATM stands, pushing customers toward alternative options. The report emphasized the rise in agency banking usage, with six in 10 customers opting for bank agents every week.
According to the multinational consulting firm, digital transactions through mediums like point-of-sale (POS) operators have become more prevalent, pushing medium digital transactions out of the top 10 in the survey. Customers’ quest for readily available cash options has propelled the popularity of bank agents across the nation.
The survey disclosed a 52 percent increase in digital payments between January and October 2023, based on data from the Nigeria Inter-Bank Settlement System (NIBSS). This surge was attributed to the cash crunch caused by the Central Bank of Nigeria’s naira redesign policy in the first quarter of 2023.
KPMG noted that the policy aimed to regulate cash circulation and reduce reliance on physical currency. While this triggered a spike in digital payments, it also led to multiple cases of transaction failure for Tier-1 banks, prompting a shift in customer preferences towards fintech solutions.
The report revealed a substantial change in customer behavior, with 58 percent of respondents switching to fintechs or changing banks during the period. This marks a radical shift from the 15 percent who switched banks in 2022. Approximately 13 percent of retail banking respondents now rely on fintech for their primary banking needs, a significant increase from the four percent who made the switch in 2022.
