Editorial
In the last few years, Nigerians in urban areas are already getting used to the comfort of cash withdrawals from various points, including banking halls, shopping malls, filling stations, hospitals, military facilities and hotels. These cash withdrawal activities are mostly conducted from Automated Teller Machines (ATMs) owned by banks.
The directive by the Central Bank of Nigeria (CBN) that all banks should refrain from placing their ATMs in places other than their banking premises as from the end of June 2009 will affect the convenient access to cash by banks’ customers.
From the directive, it has become clear that other than banks, ATMs could be placed by other groups, but this must be outside of banks premises, as banks are only allowed to place such at their premises. Is this a new directive or has it been the case for a while? If it has been the case for a while, how have banks been allowed to flout this rule? If this was a CBN’s rule flouted by the banks, it constitutes a very serious breach of regulation policy. According to CBN, only the ATM Consortium is permitted to deploy ATMs in public places while banks are meant to deploy within their premises. The order was also based on fears of threat to security and congestion of public places.
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But this directive now raises a number of issues. The banks will now be forced to collaborate or sell their ATM facilities outside their banking premises. This may mean a huge loss for them as they have little or no choice but to count their losses on the deployment of ATM machines outside their premises. If the cost of doing this is significant, especially to the ATM Consortium, it will drive up the cost of withdrawal at the machines. As it is the trend in other countries, it is expected that the cost of withdrawal from these ATMs will be higher than that at the banks’ premises. This may slow the progress that has been made in the impact of banking technology in Nigeria in recent years.
The fact remains that ATMs are needed most in those places. The argument of unhealthy competition for public space by the banks as one of the reasons for the order is not a serious one. What is serious is whether the banks have knowingly flouted the CBN’s rules on the deployment of the machineries. In any scenario of limited resources, competition is unavoidable. Banks are used to competing for anything that is openly available to them.
The excitement of ATM card usage is the widespread access it affords its carriers. The advent of ATMs and other electronic transaction options have improved banking in Nigeria. Any policy to shrink this possibility cannot be in the interest of the public. We therefore expect the CBN to ensure that the consortium quickly meet the demand for access to cash by the public at many convenient places across the country, but this is doubtful. If the ATMs are not easily accessed by banks’ customers then it would be a form of reversal of banking successes already recorded in Nigeria. Once customers cannot locate ATMs close to them, they would all throng the banking halls and therefore causing more serious threat to security. Nigerians are expecting more convenience from use of information technology and looking towards a cashless society. Based on research, it is seen that technology enhances economic activities thereby bringing about economic growth and development.
A solution lies in thinking about offering convenience to the public. The CBN can start enforcing the deployment policy from this time onward, while leaving the existing ones. We cannot simply cripple a policy because we are afraid of confronting the challenges of facing the implementation of the policy. Already deployed ATMs should not be affected as their removal would disrupt services to consumers. ATMs have possibly become like bank branches, their removal would be difficult to explain and would be a great disservice to their users. On its part, the CBN should learn to act proactively. Its remedy-after-tragedy approach is capable of springing consequences it never imagined. ATMs are about the most convenient service banks provide, the CBN should therefore expand its use, order provision of more security around them, and not cut down on their usage.
