As news of Standard Chartered Bank’s plans to close most of its branches in Nigeria hits the air waves, bank staff are becoming very uncomfortable and appear now to be murmuring ‘not again’. There is now widespread concern that a fresh wave of massive sacking of staff may be looming in the Nigerian banking industry again and one catalyst that is being fingered is the fast spreading digital banking option.
Everybody indeed, experts say understands the implication of the bank closing about 50% of branch offices in Nigeria alone. The clear implication of this, some analysts say, is that some staff will be sent home while some may be redeployed to other branches.
Cold sweat, jitters and fear have become common future in the lives of banks’ staff who do not know when they will be locked out of their systems , which might mean that the person is no longer a staff. Standard Chattered is an international bank which may have seen the future, that may not be unconnected with the fast spreading of digital banking in addition to the springing up fintechs all over the world.
Unfortunately, the reality of things at the moment is that many Nigerian banks are truly going to review and rationalize their operations and costs given the deeper penetration of fintechs in the industry lately.
Of course, the entry of MTN, Airtel and Glo who have all secured the approval of the Central Bank of Nigeria (CBN) to provide banking services is sure to engender competition between DMB’s and these giant telcos.
Whereas the telecom firms may require a few more hands to handle the banking services, the banks will have no option than of rationalize their staff strength for efficiency and effectiveness.
‘’If only 13 branches of the bank will be up and running ultimately, compared to around 25 operating before the move where will the rest of the staff go? an analyst who pleaded anonymity said on the Standard Chartered situation.
There are fears that more banks might activate and escalate their digital operations which will enhance services, ensure that operational cost is moderated and prompt staff rationalization.
While a few have argued that such adjustments usually come with the pruning down of staff strength of the financial institutions, others opine such exercises are carried when innovation which come with better ways and strategies of rendering banking services that also sometimes prompt expansion and accommodation of more staffers.
Experts have supported this argument that,
‘’With increasing digitization and AI-Robotics technology making inroads into the banking sector, we could see a reduction in jobs as processes get automated. And this time, it is not the same situation as the earlier one when computerization was introduced. Computers assisted humans to perform their jobs better. It didn’t replace humans but humanoid robots will definitely will. We don’t need to press the panic button now as it will be quite some time, maybe years, before that happens.
‘’And in all this, if there is one job that these AI (Artificial Intelligence) machines can’t replace and is totally job secure, it is client interfacing roles like customer service, sales & marketing, business development, financial advisory, wealth management etc,” he said.
‘’A paradigm shift is underway in the banking industry. Digitization is the new norm as we transition towards a more efficient cashless society. But, more importantly, cognitive technology has made inroads into the banking world and taking definitive shape,” said a senior banker.
Former managing Director of the defunct ACB International, Mr. Emma Nwosu told Business Hallmark that, a bank’s business decision depends on its business focus. Nwosu who categorized Standard Chartered Bank and Stanbic IBTC as captive conglomerates given that they have accounts of the multinationals they chiefly service, said the decision that warranted the closure of some of its branches must be on account of beneficial risk factors.
He said that though any closure of branches might affect jobs, other Nigerian banks which are really into retail banking may not follow suit given their own focus, strategies and the state of the economy.
‘’What used to obtain is that you seek approval from the CBN to open a branch or close a branch. That notwithstanding, it is also possible that the digital platform may create more jobs than what already exists. Whereas there may be job losses with pruning of branches, but digital platform offers new opportunities for banks to offer more efficient services’’, said Dr. Boniface Chizea, MD/CEO, BIC Consultancy services.
There is a consensus that digital banking would enhance financial inclusion as well as help increase access to deposit products and payment/remittance services to small businesses, low-income households and other financially excluded entities through high-volume low-value transactions in a secured technology-driven environment.
The financial technology space in Nigeria has become quite a competitive subsector in the economy with a reported 250 companies in the system.
Little adjustment or upheaval has always shaken the banking industry in Nigeria and caused job losses.
Last year, over 3,754 workers from about eight banks were disengaged. The sacks took effect despite the CBN’s warnings against banks retrenching due the devastating impact of Covid-19.
In a statement titled: “CBN, Bankers’ Committee Suspend Staff Lay-Offs in Banks,” the bank ordered the immediate suspension of such plans.
It read: “A special meeting of the Bankers’ Committee was convened on May 2, 2020, to further review the implications of the COVID-19 pandemic on the Nigerian banking industry. The Committee particularly deliberated on the issue of the operating costs of banks in view of the disruptions emanating from the global economic difficulties and decided as follows:
“In order to help minimize and mitigate the negative impact of the COVID-19 pandemic on families and livelihoods, no bank in Nigeria shall retrench or lay off any staff of any cadre (including full-time and part-time).
Statistics show that the total number of staff among the banks surveyed dropped by 7.31 percent from 51,350 in 2019 to 47,596 in 2020.
Out of the eight banks surveyed, only Zenith and Fidelity banks increased their staff strength.
Zenith Bank added 139 fresh faces to increase its staff strength from 7, 405 to 7,544 in 2020.
Also, Fidelity added 12 new staff to increase its workforce from 2,933 to 2,945 last year.
Access Bank, United Bank for Africa, Guaranty Trust Bank, First Bank, Union Bank, and First City Monument Bank all cut down on their staff strength.
Strikingly, 63.9 percent of the staff cut was carried out by UBA. The lender’s staff strength dropped from 13,237 in 2019 to 10,838 last year.
However, UBA’s huge lay off might not be in only Nigeria as it operates branches in over 23 countries across the world.
Further analysis showed that First Bank also sent home 674 of its employees as its staff numbers dropped from 9,016 in 2019 to 8,342 last year.
GTB on its part disengaged 412 workers as its staff strength fell from 5,606 in 2019 to 5,194 last year.
FCMB reduced its staff strength from 3,893 to 3,619 after disengaging 283 employees in 2020.
Nigeria’s biggest lender, Access Bank, also told 117 staff to go home. Unfortunately, Nigeria is among the nations with the highest unemployment rates in the world.
According to the National Bureau of Statistics (NBS) unemployment and underemployment report for the fourth quarter of 2020, the unemployment rate rose to 33.3 per cent from the 27.1 per cent recorded in the second quarter of 2020. This means that 23.3 million — about a third of the almost 70 million people in Nigeria who should be working — are out of jobs.