Nigeria Banking Update

Automated Teller Machine (ATM) was introduced into the banking system to solve the problems associated with late night or off banking hours withdrawal of money. In other words, it was conceived to serve the people where there are no tellers (bank officials) either due to closure or over the weekend when there are limited working hours.

It could only be natural therefore that the whole world, including Nigeria would embrace this innovation aimed at making banking easier. The banking industry in Nigeria caught the ATM bug about three years ago, although, it was not entirely unknown to any stakeholders in the industry before this time.And as usual, in line with the Nigerian system, various issues have been raised over the introduction of the ATM in the banking industry.

The first issue that comes to the fore is the efficiency of the ATM in Nigeria. The company, Interswitch Consortium which supplies the ATMs to Nigeria banks have been unable to do a proper link or interconnectivity among banks. The ATMs body with ATM card could cash money anywhere in the country and at any bank, eateries or supermarkets.And in fact, the designers of the ATM expected it to be universal, that is, anybody with ATM cards could cash money anywhere one finds himself or herself. As a matter of fact, this is possible in over 170 countries of the world, but definitely , Nigeria is not part of these countries for obvious reasons.

Apart from this problem, other problems associated with it is the malfunctioning of the equipment. This may be partly due to the lack of indepth technical knowledge of the handlers. For instance, it is common for the ATM to deduct money from ones account without actual payment to the owner only to re-credit such account.There is also the ‘pick failures’ which prevent the equipment from dispensing the correct amount of cash.

Many banks in Nigeria today do not encourage its use as such because of the associated problems which may not even allow for account balance in some instances. But then, those who invented the ATM actually anticipated some problems that may arise with the introduction. However, the type of problems being encountered in Nigeria may differ entirely from the ones they anticipated in a healthy society.

By far the most disturbing problem is that of fraud and attempted fraudulent acts of some unscrupulous Nigerians. As usual with some Nigerians, they have been devicing various means of stealing money out of the ATMs. In actual fact, many have succeeded in robbing ATMs, while some were not that lucky as they were caught in the process and handed over to policeman.
Unfortunately, these fraudulent activities of fraudsters are responsible for the managements of different banks in the country to decide not to leave the machines outside the banking hall when they close for the day. Ordinarily, the ATMs are expected to operate for 24 hours a day, but nowadays, most banks place the machines permanently in the banking hall to prevent thieves and the likes from stealing money from it.


As noted earlier, the designers of the machines must have anticipated some little problems here and there. For example, it was learnt that the first ATMs were off-line machines, meaning money was not automatically withdrawn from an account. The bank accounts were not (at that time) connected by a computer network to the ATM. Therefore, banks were at first very exclusive about who they gave ATM privileges to. Giving them only to credit card holders (credit cards were used before ATM cards) with good banking records. But this problem was disposed with the moment real ATM cards were produced. This is a card with a magnetic strip and a personal ID member to get cash. ATM cards had to be different from credit cards (then without magnetic strips) so account information could be included.


If the inventors had anticipated some problems in this regard, definitely not the types confronting the use of the ATMs in Nigeria. For one, the machine could only be used successfully in a country where honesty is the watchword and clearly that is hard to find in Nigeria.Again, the machine is designed to operate in an environment where all logistics are put in place. That is also an expensive demand in Nigeria. What all these add up to is that the ATMs may become moribund in Nigeria, except if all these anomalies are checked which is anyway doubtful. What’s more the menace of fraudsters, could loudly be contained and which may continue to dissuade the banks from progating its extensive use, thereby discouraging them from further developing on the ATMs.