In this interview with NIKE POPOOLA, the President, Chartered Institute of Bankers of Nigeria, Mr Bayo Olugbemi, speaks on capacity development in the Nigerian banking sector and the impact of the coronavirus pandemic
What should be done to protect the economy against the adverse effects of the COVID-19 pandemic?
Already, the Federal Government, through the Central Bank of Nigeria and other development financial institutions, has put together some financial palliatives and intervention funds to assist businesses.
Further support for small and medium enterprises is canvassed, particularly in key sectors of the economy such as agriculture and manufacturing as well as emerging sectors such as entertainment, particularly in the area of digital content.
There is a need for further support for banks with significant exposures to sectors greatly affected by the pandemic such as aviation, hospitality and transportation. A plan to curb the rise in non-performing loans should be of top priority as it implies financial system stability, which in turn safeguards the economy.
How has the pandemic affected the banking sector?
Rise in non-performing loans, as implied in the foregoing response; banks’ exposure to sectors hardest hit by the pandemic presents the danger of increasing non-performing loans. For example, given the slowdown in economic activities, oil and gas, transportation, aviation, hospitality sectors have been the hardest hit and may experience challenges with loan repayment. A rise in NPLs would affect the banks’ ability to lend further and eventually hurt financial system stability.
Operational/cybersecurity threat in compliance with the state government guidelines; most banks are operating with a reduced staff strength at physical branches. Staff members are encouraged to work from home, meaning a greater reliance on digital resources. This reality leaves banks vulnerable to cybersecurity breaches or cyberattacks.
What is the ‘new normal’ shaping the future of the Nigerian banking sector?
The most apparent is further reliance on digital platforms such as USSD, banking apps and payment system services.
Operational differences in order to reduce costs; banks may consider the possibility of more staff working from home than been physically present in their facilities.
How prepared are Nigerian banks for these changes?
In order to prepare for the new normal, banks are strictly adhering to the guidelines provided by the Presidential Task Force and the state governments respectively. They are also doing more businesses through digital platforms.
Many customers have signed up for e-banking since lockdown was introduced in the country to contain the pandemic. What precautions should new users take when using e-banking for the first time to avoid cyber fraud?
According to NIBSS (Nigeria Interbank Settlement Service) data for 2019, there are 23 million users on the e-banking platform of the banks. The information on new members onboarded is not available on the NIBSS website as at the time of this check.
Precautions for customers include ensuring they do not share their personal banking details or information with anyone. They should always access their bank’s internet banking via the bank website. Always disregard information received via email requesting for personal bank information or for Bank Verification Number update. Never share your debit card information or personal identification number with anyone.
How would you rate the standard of human capacity in the banking industry?
The standard of human capacity is good, but we promise to train and retrain all staff of banks at various levels as much as it is within our scope and power.
What is the CIBN doing to improve capacity in the banking industry?
We are collaborating with various bank academies to catch very young fresh graduates being recruited into the industry. Apart from accrediting their programmes, we encourage the executive trainees to write and pass the examinations of the CIBN leading to them becoming associates.
We also provide different routes to experienced bankers to becoming associates of our institute. We organise various knowledge sharing programmes that ensure bankers are current and are thoroughbred professionals who are highly ethical.
Do you think banks are investing enough in training and technology?
Yes, the banks are doing well in the area of training their staff as well as investing heavily in technology. That was evident during the COVID-19 lockdown; the banks were able to discharge their duties without much ado.
What are your plans for the institute as the new president?
The plans of our presidency are succinctly encapsulated in my acceptance speech, which is available online. The summary is embedded in the acronym, A-TEAM. It means Accelerated development; Technology and digital enhancement; Engagement for growth; Accountability and transparent leadership; and Membership drive for value.
Are you partnering with other national and international bodies in your training programmes?
Yes, we are partnering with several organisations such as the Chartered Institute of Securities And Investments, UK); Bangor University, Wales; the Chartered Institute of Bankers Scotland; the London Institute of Banking and Finance; the Alliance of African Institutes of Bankers; the Global Banking Education Standards Board, led by our indefatigable past President, Dr Segun Aina, FCIB. On the local scene, we have linkages with close to 100 universities and polytechnics. We also have alliances with the Lagos Business School, the Nigerian Institute Of Social And Economic Research, and the Nigerian Economic Summit Group, among others. We hope to continue to leverage the goodwill of financial services regulators and self-regulatory organisations such as the Federal Ministry of Finance, the Central Bank of Nigeria, the Nigeria Deposit Insurance Corporation, and the Securities and Exchange Commission.
Many disgruntled bank customers don’t know how to lodge their complaints; how can these complaints be presented to the CIBN?
Complaints against banks should be addressed to the Secretary, Bankers’ Committee, Sub-committee on Ethics and Professionalism, C/O CIBN Ethics and Professionalism Division, Bankers’ House, 1st Floor, Pc 19, Adeola Hopewell Street, Victoria Island, Lagos.
How many complaints has the institutes’ complaint bureau been able to solve and how much has been refunded by banks?
From inception to June 30, 2020, the number of cases received is 2,180; the number of cases resolved is 2,049; the amount claimed on cases received is N352.9bn; the amount claimed on cases received in foreign currency is $423.8m; the amount awarded on cases resolved is N32.4bn; and the amount awarded on cases received in foreign currency is $19.04m.
Do you expect an increase in non-performing loans in the banking sector as banks increase their loans to SMEs during this pandemic?
Yes, I believe banks with significant exposures to sectors that have been highly impacted by the pandemic would face challenges in getting their loans repaid as and when due. Therefore, it is important and advisable for banks to consider debt restructuring strategies for those sectors/customers affected.
Are there still opportunities for the banking sector amid this pandemic?
Yes, as implied previously, banks should focus more on the emerging sectors of the economy. These include the entertainment sector. We should also further help build the capacity of SMEs to meet supply at intercontinental levels. We assume that as the lockdown eases and international movement restrictions are relieved, the African Continental Free Trade Area would be leveraged upon for greater trade across the continent. Therefore, banks should take advantage of the various opportunities which present themselves as a result of this agreement.
The Monetary Policy Committee lowered the benchmark lending rate at the last MPC meeting but some experts still argue that the rate is still high. What is your take on this?
I fully support the Monetary Policy Committee on their decision. I believe that their decisions are based on informed metric systems and are in the best interest of the economy.
What impact have credit bureaus made so far in the Nigerian financial landscape?
Today, we have only three registered credit bureaus in Nigeria. Today, unlike years ago, these credit bureaus are able to collect and share information about the creditworthiness of individuals and businesses. It has reduced to some extent the truancy being exhibited by bank loan defaulters who abandon one bank to move to another. There is a better handshake now than it was 10 years ago. We are developing and can only get better.