When the Bankers’ Committee last year November announced the withdrawal of the N100 Automated Teller Machine (ATM) charge there was widespread jubilation over what many said was the removal of a big burden from the shoulders of bank customers.
But the banks took the resolution? with a pinch of salt. They reluctantly agreed to comply as it took the banks more than one month to be whipped? by the Central Bank of Nigeria (CBN) to comply.
Some bankers who spoke to LEADERSHIP, but would not want their names mentioned said the removal of the N100 charge negates the basic principle of banking. According to them, banks are in the business of buying and selling money. This is because, they take deposit at a rate and give out money at a rate –lending rate.
The crux of the matter, according to them is that? there are smaller banks with fewer ATMs, while some banks are regional. But somebody with bank A ATM will collect money from bank B ATM for free. That means the money the bank bought at an interest is given out? free to a customer of another bank.
But some analysts believe that banks are too shrewd to give anybody a free lunch. According to them, there must be some kind of hidden charge that will take care of such lapses.
With the cancellation of the N100 ATM charge, analysts say operational costs of banks will increase as the cost of cash as well as that of servicing ATMs are no longer financed with the charges that applied to them.
The cancellation will without doubt favour regional and smaller banks as they are more likely to relax on expanding infrastructures such as ATM deployment. This is because their customers who would have had to pay extra costs to access their services in some areas would now make transactions in any part of the country (even in places where their banks have little or no presence) without having to pay for it.
For example, a regional bank such as Wema Bank can convince more people to bank with it as they would be able to transact and access their cash from anywhere in the country via ATMs without extra cost to the customer.
Meanwhile, LEADERSHIP investigations revealed that while some banks are siting their ATM terminals in areas where they have more traffic, others are deliberately allowing? their ATM portals mostly used by other banks’ customers run out of service.
An example is the Skye Bank ATM gallery in the heart of Ikeja. Though with almost 10 ATM machines, one can hardly find two of the machines functional at any point in time and sometimes none of the terminals would be functional.
A recent visit to the gallery by this? LEADERSHIP revealed that most of the terminals were out of service and those not out of service had the large inscription “do not use this ATM”,? warning card users.
A source in one of the new generation banks told LEADERSHIP that the bank was working towards expanding its operations in order to grow its income and cover up for any short falls that may arise in its profit book at the end of the year.
According to the source, “we are trying to bring in more customers and more businesses so that at the end of the day the percentage of the operational costs would not be too much on the income. Because the charge for the ATM transaction is still there but the customer is no longer paying for it, instead the bank is footing the bill and it is adding to our operational cost.
While some analysts note that the cancellation is less likely to have a huge impact on their accounts, others say banks would have to cut costs in some other areas to make up for the cost that would be incurred on the ATM transactions.
Chief Executive of Financial Derivatives Company Limited, Bismarck Rewane explained that banks would eventually have to cut back on the number of staff they currently have. According to him, tellers are more likely to bear the brunt as the number of customers making use of the baking hall reduces with the increased use of the ATM.
“There is going to be a cut back in the number of cashiers because if a cashier attends to 2,000 customers in a day and now because of the increased use of the ATMs the cashier is attending to 500 customers, the bank is definitely going to restructure and either let go of the cashier or transfer him to another department where he would be more profitable”, he explained.
Despite the possible reduction of staff, Bismarck says the move is a price being paid by the banks to the advantage of the industry. He explained that there would be an increased use of the ATM portals, reducing banking hall transactions and aiding the cashless policy of the Central Bank of Nigeria (CBN).
Sewa Wusu, Head of Markets at Sterling Capitals Limited on the other hand believes that banks’ books are less likely to be affected by the removal of the N100 ATM charge. According to him, there are other businesses banks do and they would have to focus more on their core areas.
He noted that the cost incurred from ATM transactions would be covered up with gains from? other transactions to ensure that the banks retain their profitability. He however noted that all the banks would bear the burden of one another to favour the cashlite policy as well as the convenience of the banking public.
Okechukwu Unegbu, former president of the Chartered Institute of Bankers of Nigeria (CIBN) said, unless the banks have agreed at the Bankers’ Committee level, it is unimaginable that a customer of bank A collects money from bank B through the ATM.
He said, in other climes, when one uses the credit card of say Bank A to collect money from Bank B, charges are applied.
Unegbu nonetheless said banks could be cutting down on overheads through hidden charges. He wondered what the meaning of a so-called management fee charged by banks means, adding that, some of the banks are yet to revert to a N3 per every N1,000 COT, instead still collect N5.
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