ATMs
were the earliest banking technology available, and as of 2021, there were 16
ATMs for every 100,000 adults in the country, per the World Bank.
Depending
on the success of remote banking machines, Nigeria introduced NIBSS Instant
Payments. This technology played a significant role in Nigeria’s digital
banking sector by making mobile and internet banking possible.
Contemporarily,
online banks have opened their doors to customers in Nigeria and it has been on
the rise and is set to continue in the years ahead. The pandemic streamlined
its global explosion so much that experts have projected online banking users
to reach over 3.6 billion globally by 2024.
However,
despite the rise in online banking in Nigeria, it poses challenges to banks and
customers.
One of
the most pronounced challenges is security breach because of the inherent
concerns that are associated with online banking. Although banking systems are
designed to be virtually impenetrable, cyber-attacks and fraudulent activity
are still a reality.
Mobile
browsers and apps account for 71% of fraudulent bank transactions. Fraudsters
prey on poor privacy habits on the part of the user. Issues like weak passwords
and using unsecured networks make people vulnerable to online attacks, like
login credential theft and phishing, which could result in fraudulent bank
transactions.
Digital
offline banking, which is a digital banking process that works without internet
connection, is a solution to this security breach in view of the fact that
users are not exposed to internet fraud while using it. It uses Unstructured
Supplementary Service Data (USSD), otherwise known as quick codes or feature
codes which can be dialed even on non-android phones to make transfer and check
account balance.
In this
type of banking, security breach can occur only if the fraudster gains access
to the user’s mobile phone and knows his USSD code, which is very rare.
Technical
issues pose another challenge to online banking in view of the fact that whenever
we use the internet, we risk experiencing technology and service interruptions.
System stability and efficiency can affect your ability to access your accounts
if your internet is slowed or stopped entirely.
Similarly,
no matter how sophisticated the technology, bank servers are still prone to
both intentional and accidental downtime. System downtime can be a challenge as
not only are users unable to make payments or conduct transactions but concerns
about data and fund security also start to emerge.
A
solution to this technical issue is to embrace offline digital banking. Here,
the USSD mentioned above works 24/7 and is preferable when it comes to emergency
transfer of money. System downtime hardly occurs here.
Exorbitant
service charges is another issues that customers of online banks face. Hidden and arbitrary charges are now the norm
with Nigerian online banks, which is giving them a not-so-pleasant reputation.
These endless charges have almost become a necessary evil as customers now live
with them; having been left without options.
It is a
well-known fact that mobile money transfer is more affordable that online
banking transfer. The cost is low and can be used by all and sundry,
notwithstanding his financial class.
USSD
has contributed immensely to financial inclusion in Nigeria. In a country where
6 out of every 10 phones are feature phones and where 3G connectivity only
overtook 2G in 2020, USSD is a game changer.
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