KPMG Report: Nigerian ATM Usage Plummets by 30% in 2023

In a recent report titled “In Pursuit of Value,” KPMG, in collaboration with Infostride News, has uncovered a significant transformation in the banking landscape in Nigeria and Ghana. The study, which delves into the experiences of customers throughout 2023, reveals a noteworthy decline in weekly ATM usage among Nigerians, dropping from a substantial 70% in previous years to a mere 40% in the current year.

One of the primary factors contributing to this decline is the recurrent unavailability of cash in many ATM stations across Nigeria. The report highlights that the medium of digital transactions, once at the forefront, has now slipped outside the top ten preferences among surveyed customers.

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

The surge in agency banking underscores the persistent popularity of cash transactions, highlighting customers’ preference for readily available cash options. This preference is primarily driven by the widespread popularity of bank agents throughout the nation.

The survey also sheds light on the increase in digital payments, which saw a remarkable 52% rise in the period between January and October 2023, according to data from the Nigeria Inter-Bank Settlement System (NIBSS). The spike in digital payments was attributed to the cash crunch resulting from the Central Bank of Nigeria’s naira redesign policy in the first quarter of 2023.

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

However, the rise in digital payments posed challenges for Tier-1 banks, leading to multiple instances of transaction failures. In response, fintech companies such as Opay, PalmPay, and Moniepoint stepped up to the challenge, prompting a significant shift in customer preferences.

The survey reveals that 58% of respondents opted to switch banks or had reasons to turn to fintechs during this period, marking a radical departure from the 15% who made such switches in 2022. Additionally, approximately 13% of retail banking respondents now rely on fintechs for their primary banking needs, a substantial increase from the 4% who made the switch in 2022.

In conclusion, the KPMG and Infostride News report paints a dynamic picture of the evolving banking landscape in Nigeria, where the decline in traditional banking methods, such as ATM usage, is juxtaposed with the rapid rise of agency banking and digital payment platforms. This transformation signifies not only changes in consumer behavior but also the adaptability and resilience of the financial sector in response to policy changes and technological advancements.