Digital operation, partnership with Fintech to drive future of banking post Covid-19

The future of banking in the post COVID-19 era would be driven by digital operation and strong partnership with Fintech companies that would yield enhanced service deliveries to their clients.

This was the submission of Okechukwu Unegbu, managing director of Maxifund Securities Limited.

Other features of the banking in the post pandemic environment include enhanced cyber security, widening of financial inclusion, improved lending and creation of credits, mortgage financing and staff training.

“Banks should encourage the evolution of mortgage firms that can offer facilities with repayment period of between 10 to 25 years. They should also provide adequate training to their staff on critical areas banking operations and relationship with clients rather than harping on deposits mobilisation alone,” Unegbu said.

The former President of the Chartered Institute of Bankers of Nigeria (CIBN), spoke on ‘COVID-19 and the Future of Banking’, at the monthly forum of the Financial Correspondents Association of Nigeria (FICAN), via a Webinar.

He advised Nigerian banks to grant their debtors who had suffered huge losses in the aftermath of COVID-19, a generous leeway that would enable them to bounce back and be able to settle their credit obligations.

Unegbu also advised the operators of the banking industry to stay away from litigation or any form of legal processes in resolving any dispute with their customers.

Banks he said should tell their debtors something about their plans on managing the interest rate on facilities they have given to them.

All parties, including the banks and their customers, have been adversely affected by the COVID-19 pandemic. There is no exception. “But I expect banks to sit down with their clients and find out ways to enable them to launch back and then settle their indebtedness,” he said.

He suggested that banks should offer their debtors a moratorium on the principal and at least 50 per cent reduction on the interest rates. “Banks should get mediators instead of being legalistic,”.

Uche Uwaleke, professor of Finance and Capital Market and former Chairman CIBN, Abuja branch, said Post COVID’19 is likely to witness an increase in risk aversion by Deposit Money Banks and as a consequence a reduction in private sector credit.

“So, there is no doubt that many lending institutions will be loan shy. This will have a negative impact on profitability and may result in some cost cutting measures including laying off staff. Nevertheless, it is hoped that the Central Bank of Nigeria, through its Loan to Deposit Ratio and other measures including a possible relaxation of monetary policy, will assist the banks in weathering the storm and help to get the economy out of recession,” Uwaleke said.

Unegbu expressed hope that Nigeria should witness a “U” curve rather than a “W” curve in the management of the COVID-19 pandemic.

He pointed out that the “U” curve would enable the country to exit the pandemic once and for all while a “W” curve would mean another resurgence of the pandemic after the current experience, which he said, would be very devastating to the economy.

Unegbu also said Nigeria should encourage, through the banking sector, the promotion of product incubation that would promote local manufacturing rather than relying on importation. “We should stop living on denial. We have seen it happen during the Biafra-nigeria war how Biafra produced most the things it needed within its boundries,” he said.