ATM Usage in Nigeria Dropped 40% in 2023, as Naira Scarcity Persist – KPMG Report

A recent report from multinational professional services network, KPMG, reveals that the usage of Automated Teller Machines (ATM) in Nigeria, dropped by 40 percent in the last quarter of 2023, amid the scarcity of Naira.

In the report titled “In pursuit of value”, KPMG revealed that the figures were obtained from surveyed customers of Nigerian and Ghanaian banks who narrated their experiences during the year 2023.

Part of the report reads,

“Currently, four in 10 customers report weekly ATM usage, a notable decline from the previous seven in 10 over the last few years. This decline in ATM usage coincides with a significant rise in agency banking usage, with six in 10 customers frequenting bank agents every week.

“Consequently, digital payments surged, marking a 52 percent increase in total NIBSS Instant Payment transactions by October 2023 compared to January of the same year. This was triggered by the Central Bank of Nigeria’s (CBN) initiative to overhaul the Naira, aiming to regulate cash circulation and reduce reliance on physical currency”.

The report further explained that the rise in digital payment overwhelmed Tier-1 banks with multiple cases of transaction failure but fintechs such as Opay, PalmPay, and Moniepoint rose to the challenge leading to a significant change in customers’ preferences.

According to the survey, 58% of respondents switched banks or had reasons to change to fintechs during the period. This presents a radical shift from the 15% who switched banks in 2022.

Also, around 13 percent of retail banking respondents now rely on fintech for their primary banking needs from the four percent who made the switch in 2022.

Despite assurances from the Central Bank of Nigeria that there is enough cash in the economy, Nigerians have continued to decry the cash scarcity, as many Automated Teller Machines spread across the country, lack funds.

Fresh developments in the financial sector have shown that despite the CBN’s move to ameliorate the cash crunch situation by suspending charges for cash withdrawals above regulatory limits, scarcity of currency notes in the banks nationwide has continued to hit harder.

Findings revealed that banks across the country have continued to ration cash withdrawals in the banking halls and through their Automated Teller Machines (ATMs) while Point of Sale Operators, PoS, operators, have taken advantage by hiking transaction fees by not less than 100%.

Amidst the turmoil, the CBN Governor Yemi Cardoso, have repeatedly assured Nigerians that it had supplied the banks with enough cash. But this has not in any way reflected in the country, as the CBN blames the scarcity on hoarding.