The outbreak of the COVID-19 pandemic accelerated digital banking transactions, Ade Ayeyemi, the Group CEO of Ecobank Transnational Inc. (ETI), said.
Ayeyemi made this known on Monday during a virtual session with Bloomberg Live.
“Yes, before COVID-19, customers understood cashless banking but when overnight, in one of our countries, the banking industry was closed with less than 48hrs notice, people had to transact digitally,” Ayeyemi said adding that they understood that it was the only way out.
According to him, the bank customers realized they can transact digitally due to the compulsory lockdown of the banking industry.
“I think going forward we are going to have more digital transactions,” the CEO projected.
One month after Nigeria reported its first COVID-19 case on February 27, 2020, the government in Africa’s largest economy ordered the cessation of all movements in Lagos, Ogun and the FCT for 35 days to curtail the spread of the virus which has since affected 20244 people with 518 deaths and 6879discharged.
Two days into the COVID-19 restriction, the government said important financial services like banking and insurance will continue to function during the lockdown period to help people meet their financial needs.
This comes as fresh guidelines for the second phase of the lockdown, which became effective until May 3.
“To mitigate hardship to the public, selected additional activities have been allowed which will come into effect from 20th April. 2020. These limited exemptions will be operationalized by states/UTs / district administrations based on strict compliance to the existing guidelines,” the MHA directive noted.
As per the revised guidelines, IT vendors for banking operations, banking correspondents, ATM operations and cash management agencies will also be functional.
Bank branches were allowed to work as per normal working hours till disbursal of DBT cash transfers is complete, it said, adding, local administration is to provide adequate security personnel at bank branches and for banking correspondents to maintain social distancing and staggering of account holders.
“The important components of the financial sector, e.g., RBI, banks, ATMs, capital and debt markets as notified by SEBI and insurance companies will also remain functional, to provide enough liquidity and credit support to the industrial sectors,” the consolidated revised guidelines issued by the Home Ministry said.
On how COVID-19 impacted transactions of Eco Bank customers, Ayeyemi said while 90percent of the bank customers were transacting via digital means pre-COVID-19, the number increased by 5 percentage points.
“During COVID-19, 95 percent of our transactions were digital and only 5 percent were physical in places where the branch network was still open because people were withdrawing a lot of money from ATM as well,” he said.
According to the group CEO of the pan-African bank, with the current use of technology by the government, people will become used to digital transactions.
“Government is now using digital means as a way of transferring social safeness for their population, and so people are becoming more accustomed to using those digital means because it is safer, cheaper and it can be delivered to them at the price point that they can afford,” Ayeyemi said.
The importance of digital financial services for a country like Nigeria which runs a cash-based economy cannot be overemphasized especially at a time when social distancing and contactless transactions is the order of the day.
The urgency of utilizing fintech to keep financial systems functioning and keep people safe has been amplified by the outbreak of the deadly coronavirus.
According to the World Bank, digital financial services, powered by fintech, have the potential to lower costs by maximizing economies of scale, to increase the speed, security and transparency of transactions and to allow for more tailored financial services that serve the poor.
“Fintech is helping governments quickly and securely reach people with cash transfers and other forms of financial assistance and reach businesses with emergency liquidity,” Ceyla Pazarbasioglu, Vice President Equitable Growth, Finance and Institutions, The World Bank Group said.