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Revisiting the ATM Card Maintenance Fee - THE CITIZEN

By The Citizen
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Recently, some banks mulled the idea of introducing Automated Teller Machine (ATM) maintenance charges. According to First Bank of Nigeria Plc that recently introduced a monthly charge of N100 for cash withdrawals through the ATM, it is a 'card maintenance fee' that would be for all cash withdrawals within the month. The bank also said that there would be no charges for third party transactions, that is – other bank's customers who use First Bank's ATM. This development has led to a growing customer complaint.

This is coming on the heels of the agreement of the Bankers' Committee in November 2012 in which it was agreed that the N100 interbank charge on the use of ATM cards would be scrapped. Therefore, many customers have reasoned that the new charge was a ploy to recoup what would be lost as a result of the scrapping of ATM charges by the Bankers' committee. However, in its communications, First bank had maintained that the charge was about accessibility and improved service delivery. Most customers disagree with that proposition. They maintained that it was the bank's ploy to circumvent recent agreements to shore up its bottom line.

There are already signs that there might be a cross-sell as other banks will be happy to pursue this policy. Consequently, the House of Representatives in a recent sitting asked all commercial banks in Nigeria to forestall the planned introduction of monthly maintenance fee on ATM cards. The lawmakers noted that this would burden the customers and work against the financial inclusion strategy of the Central Bank of Nigeria (CBN).

Moreover, should First bank and indeed other banks successfully implement the card maintenance charge, it might affect patronage as many customers might opt out of banking services or at least reduce patronage, especially in the retail sector. More worrisome is the potential alienation of the unbanked section of the economy. According to a recent survey, Nigeria's unbanked population currently stands at 46.3 per cent. Speaking on this issue, the CBN Director, Banking and Payment System Department, Mr. Dipo Fatokun, stated in a paper entitled: 'Mobile Money in Nigeria: Prospects, Opportunities and Challenges' at the Institute of Chartered Accountants of Nigeria (ICAN), in Lagos, that a survey carried out in 2008 by an international agency, Enhancing Financial Innovation and Access (EFInA) on access to financial services in Nigeria revealed that the level of banking access was comparatively low with just 21 percent of adult population accessing banking services, while 74 percent had never been banked. The remaining five percent, the survey found, were previously banked or had left the system.

The prospects are even juicier according to what analysts say. A recent study conducted in 2011, described Nigeria's banking market as 'alluring, potentially vast and virtually untapped' in reference to the less than 40 percent of the population aged 15 and above who have an account at a formal financial institution. This leaves the unbanked hovering around 60 percent. Thus, there is a huge potential for enterprising banks to tap and make spectacular returns instead of exploiting its customers.

Granted, Nigeria's economy is still lame duck and banking institutions are in a race to bolster their balance sheets. However, desperate times should elicit measures that are positive, sustaining and ameliorating. Pressures, anyway, can stifle novelty and this is when corporate humility can be invaluable. A bit of inspiration from elsewhere can help Nigerian banks to handle crisis and put a positive spin on it to raise needed funds.

Let us look at the Cypriot Model. Cyprus recently has been in turmoil. Its economy was (and still) in need of €5.8bn to qualify for a €10bn European Union (EU) and International Monetary Fund (IMF) bail-out. It was feared that its two biggest banks would collapse if they were not bailed. Thus, it was proposed that a levy on bank deposits would raise a considerable chunk of the thrust needed to buoy the banks. There was a public outcry against such a move. The country's finance ministry modified the proposal by making exemptions for savers with smaller deposits, however, opposition remained stern. When the proposal came to vote at the parliament, no member voted for the bill, there were few absentees and a majority voted against it. The resolution was that funds would be raised by sale of bank assets and loans from Russia to keep the economy afloat.

That the planned levy was shut down was greeted with joy by the people. The underlying lesson is that the feelings of people/customers should always be considered. Levies and charges are only knee-jerk reactions to financial pressures. It is helpful to see that there are always other (sometimes better) approaches to solving a pressing need. Understandably, banks are faced by shrivelling balance sheets, ever-demanding shareholders and stern competition. These factors aside, Nigerian banks should aspire for innovative or a re-run of tested strategies for raising capital which include attracting new entrepreneurial and capital market investors.

Moreover, banks should work out increasing its clientele by attracting the unbanked populace and mop up deposits. This will endow them with credible source of funds than exploiting customers with hidden and inventive charges which depict desperate but manipulative attempts at funds creation and management. And many customers are quick to point out that it is funds management vis-à-vis service delivery processes that make some banking experiences even less attractive.

To illustrate, consider poor service delivery: Typically, on Mondays and public sector pay days, most banking halls are congested. The halls are stuffy and unhealthy as ventilation points and air- conditioners are overstretched by the teeming number of customers.  Many banks still experience unremitting system downtimes which render banking hall software inept, mobile applications frozen and ATM machines inoperative. The human element in the service delivery process is sometimes uninspiring, nonchalant giving off a whiff of frustration or lack of motivation. Therefore, the banks need to improve on their efficiency score and process designs which include guidelines and steps for delivering services. While not comprising legal, ethical and regulatory directives, platforms for service delivery should be simplified for a correlation of customer aspirations and satisfaction. There should be capacity building to enable well-trained staff deliver efficient and effective service.

Statistics however show that poor service delivery may linger for a while. According to a recent survey by a leading opinion polling and research organisation in Nigeria, NOI Polls, it revealed that 61 percent of customers believe that commercial banks are exploiting them through hidden charges. It also stated that the public expressed concern over poor service delivery and unexplained charges by banks on their transactions. The poll explained: 'The need to grow profits is seen as a trade-off for quality customer relationship and service delivery.  As the banking industry has gone from about 85 banks to 25 banks to 22 banks over the last decade, there is an increased pressure to stay relevant and profitable in a closely regulated industry.   This pressure has continued to cause a decline in satisfaction levels with several customer engagement platforms specifically with the old fashioned 'customer service desk.'  The Customer has become more intelligent on the range of services this function should cover and so have raised the bar of expectations for banks'. 

How well the banks scale the bars unscathed remains to be seen. With ever-increasing sobering experiences of charges dotting monthly bank statements, public discontent will remain unabated. Critics are of the opinion that the banks are riding roughshod over Nigerian customers applying rules and practices they would not attempt on their clients in countries where they operate branches or affiliates.

A school of thought has hinted at recourse to the Consumer Protection Council (CPC) to arm-twist the banks to reverse the ATM Card maintenance fee. They maintained that the new charge is misleading and a 're-packaged version' of hitherto third party withdrawal charges obliterated last year. Others insisted it was illegal for banks to introduce a charge that related to an abolished precedent.

The CPC is vested with protecting consumers from exploitative providers and enforcing standards and is expected to evaluate genuine calls for investigations and seeking redress. The course of events might not turn out as some would expect. There are already discordant tones from the Central Bank of Nigeria (CBN). The director, Corporate Communications, of the apex body, Mr. Ugo Okoroafor, on the First Bank development told newsmen recently that 'what the banks agreed on was the removal of N100 charge on third party transactions. So if First Bank decides to charge its customers N100, the bank would have its reason for that.' He also added that 'It is now between the bank and its customers'.

This is not comforting. His assertion sounded more of an invitation to other banks to toe the line of First Bank and an offer of a cleaver for the neck of already weary customers.

There is, however, a glimmer of hope. Besides, urging commercial banks to restrain from implementing the new fees, the House of Representatives further mandated its committee on Banking and Currency to investigate all approved bank charges on all accounts and compliance by banks. That Report is due for a future date. The lawmakers also asked the CBN and other relevant authorities to 'urgently look into the issue and act as appropriate'.

Conversely, many customers have decided to look away from the ATM Machines or reduce their trips to them. A customer even bizarrely suggested he would rather keep his money at home than go to the bank. Shocking as it may seem, it illustrate the gaucheness of some exploited customers.

In the end, the nation's economy bears the brunt of the stagnation as customers await a positive resolution to this development. On the other hand, retention of the ATM Maintenance fee is scarily a prelude to supplementary exploitation of customers.