Following a series of CBN policies designed to move Nigeria forward towards a cashless economy, which, however, has caused significant hardship for the nation which still relies heavily on cash, the Central Bank of Nigeria (CBN) has therefore been instructed by the Nigerian House of Representatives to demand that all banks upgrade their online banking systems. Hon. Sergius Ose-Ogun, a lawmaker from the state of Edo, made the motion. Lawmakers believed that following the mandate would make it simpler and more streamlined to perform electronic banking transactions.

The House also directed its Committee on Banking and Currency to monitor compliance with the resolutions and give feedback to the chamber with any necessary legislative amendments within four weeks. The currency in circulation in Nigeria has decreased from 3.2 trillion naira in September 2022 to approximately 1 trillion naira at this moment. As a result, Nigerians have been forced to rely on digital platforms for transactions in recent months. Electronic channels such as fintech apps, USSD transactions and bank apps rescued people when physical cash became unavailable.

Nigerians struggle with failed transactions as online transactions surge.

This directive was issued when a number of Nigerians were forced to struggle with unsuccessful transactions as a result of the rapid rise of online transactions, which caused legacy banks to suffer. In his speech in support of the motion to issue the directive, the Honorable Ose-Ogun stated that the inefficiency or difficulty in utilizing internet banking services through the online banking channels of the majority of commercial banks had caused immense hardship, anguish, and problems for Nigerians over the course of the past three months.

A report from The Punch revealed that NIBSS has been experiencing an increased amount of downtime due to the demand caused by the number of transactions. This downtime has reportedly been having an effect on both the outflow and the inflow of transfers, as reported by a source who is familiar with the situation. According to the source, in order for NIBSS to withstand the strain resulting from the CBN’s strategy, it will need to improve the capacity of its operations.

Core Banking Applications allow banks to process banking transactions.

Although this action taken by the House of Representatives may have been motivated by well-meaning motives, it is unclear what the banks should be doing at this point. However, banks run extremely specialized Core Banking Applications (CBA) that allow them to process banking transactions. The integration of customer CBAs and the transition of customer information to new ones can take up to six months, according to an IT person at a prominent legacy bank. And this is sufficient time for customers to encounter downtimes that can cause panic.

According to information provided by the Nigeria Inter-Bank Settlement System Plc (NIBSS), the number of online transactions increased by 70 percent in February when compared to the month of January, while the value of those transactions increased by 7.8 percent. In a press conference on Tuesday, Nigeria’s Central Bank Governor Godwin Emefiele estimates that eNaira transactions have increased in value by 63% this year. He also revealed that the number of e-wallets have increased by 12 times, reaching 13 million.

Precise guidelines and means to deploy in the industry should be provided.

If Nigerian lawmakers seek a policy-driven fast remedy to the digital banking crisis affecting Nigerian banks, they may be dismayed. Legislators need to be aware of the precise industry standards that banks must adhere to if policy, instead of innovation and rivalry, is to push the complexity of digital banking across the nation. However, to attain the appropriate level of dependability, clear guidelines should be provided on the types of technology to deploy and maintain. There might need to be more than the directive to banks to upgrade their banking systems.

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