Three ways to secure consumer trust in financial products

For consumers to trust financial products, they must be reliable, transparently priced and comply with regulatory terms, a recent study has found.

The report of the study titled, ‘Measuring Fees and Transparency in Nigeria’s Digital Financial Services’ by Innovations for Poverty Action (IPA) and Inclusion for All initiative, examined compliance levels with existing fee structures, transparency rules, transaction reliability and consistency of information available from customer service channels, to understand trust barriers in financial services.

“The high cost of financial services reduces take-up for price-sensitive consumers. Lack of transparency on product pricing reduces trust between customers and service providers which can limit continued usage of financial products,” the report stated.

Nigeria’s Digital Financial Services ecosystem has evolved rapidly over the last decade due to increased broadband and mobile penetration, as well as digital payments, which have boosted financial inclusion in urban, rural, and hard-to-reach areas across the country.

In December 2019, the Central Bank of Nigeria (CBN) reviewed downwards most of the charges and fees for banking services. It took effect from January 1, 2020.

Before the review, the rate for electronic transfers was a N50 flat fee but now, it is N50 for transactions done above N50, 000, N25 for N5, 000 – N50, 000 and N10 charge for below N5,000.

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The charge on withdrawals from other banks’ ATMs was reduced to N35 from N65 for the third withdrawal within the same month. Today, banks charge at every withdrawal leading to widespread complaints of multiple charges by customers.

“I will liken the various deductions on every transaction done with our banks as multiple tragedies on Nigerians trying to survive this ugly economic situation,” Jibola Awe, a bank customer fumed while sharing his experience.

He accused two of the tier 1 banks as the most unfriendly to customers, saying, “Late February, I had to close my current account due to the unnecessary deductions that even the bank’s staff could not explain.

Another customer who only want to be known as Titi said “I discovered that after a transaction, I was charged ‘transfer commission’ of N20.00+Value Added Tax (VAT); I was also charged telco+VAT N7.5 and USSD telco session charge+VAT, all in one transaction,” another customer says.

Experts warn that these excessive charges will slow down the rate of financial inclusion as customers start to shun operating a bank account.

The report recommends that regulators should conduct periodic internal audits of transactions and customer care inquiries, make price schedules easy to find, make customer care lines toll free, and better train customer care representatives.

Other recommendations include requiring providers to register fee schedules with regulators and update when pricing changes are made, conduct periodic transaction audits to improve compliance and address noncompliance.