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OVERVIEW OF THE BANKING INDUSTRY

Banking in Nigeria commenced in 1892 with the African Banking Cooperation. Since the initial formative years, the banking sector has fared quite well and by 2004, the industry had a total of 89 operational banks with over 3000 branches spread nation wide. In spite of the increase in the number of players in the industry, there have been heavy losses as quite a number had been shut down leading to the loss of investors funds, and a general lack of confidence, on the part of the consumers.

The Current Scenario
The appointment of the new chief of CBN, Professor Chukwuma Soludo, brought with it a creation of new policies and reforms , primary among is the consolidation of the Nigerian Banks. The result has been the mergers and acquisition to form 24 banks poised for global business in the 21 century. The surviving banks have since developed different strategies to tap into the existing opportunities in the market, thereby, appealing to a wider spectrum of customers to increase brand equity (or secure market shares). In line with global trend, e-banking, e-payment and e-commerce has become the order of most economies. In the last one year, observable evidence shows that there has been significant growth of e-banking, e-payment and e-commerce in Nigeria. Our knowledge of this sector reveals that aside the conventional financial Services (savings and withdrawals), there is relatively low use of other services except ATM.

Nigeria in the last few years has recorded technological advancements against all odds. First was the tsunami like rapid growth of the GSM technology which in the last five years has grown in  leaps and bounds, making it the fastest growing sector in Africa and the third largest in the world.

The spread of these machines in the deployment of  financial services is a technology that cannot be ignored since the consolidation of the Banking sub sector. As at today, over 6000 ATMs have already been deployed by the banks in the last three years, making Nigeria one of the fastest growing ATM market in Africa. The combined network may hit over 10000 ATMs by December 2009 if the current rate of operation by the banks is sustained.

One of the most visible outcomes of post consolidation exercise in the banking industry is aggressive deployment of e-banking channels like ATM, mobile/sms banking, POS, etc. by the consolidated banks. The growing trend in the  deployment of e-banking shows that almost all the banks are deploying cash machines as means of decongesting their shop-floors.

Presently, most of the local banks are busy deploying off-site (non-bank branch) ATMs network in variance with global and continent trends. The same trend is noticed with the POS, where banks are working with third party ISOs to leverage on existing infrastructure.

But the local banks are jostling over themselves, and are already leasing locations at prohibitive cost to deploy off-banking site location ATMs. In Nigeria, the Central Bank of Nigeria (CBN), after extensive consultation with the banks, has put in place a statute that empower the banks to release cash to third party organizations outside the financial industry for the operation of ATM networks to encourage a similar growth locally.

Worse hit by the system, ATM Consortium (ATMC), Nigeria's pioneer and leading off-site independent ATM deployer (IAD) and operator of the QuickCash network, had appealed to the Central Bank of Nigeria (CBN) to put in place a national currency management system to ensure that non-bank operators of the facility can access ATM-fit notes in sufficient quantities to support its services.

The challenge
Though, investment opportunities abound, yet the attendant paucity of data for an informed decision is relatively non-existent. As such, there is need for stakeholders to make concerted efforts and evolve strategies to collect needed information that would drive business growth and increase brand equity.