OFFSITE ATMS IN NIGERIA AND CASH AVAILABILITY
Before now we use to have one independent deployer (ATMC) in operation in Nigeria competing with the banks till late last year 2009 when CBN licensed two other independent deployers (Cham Access and CSS) to complement the effort of ATMC who at then was struggling with difficult to find her feet in a fast moving industry. Investigation revealed that beyond other difficulties faced by ATMC in the few years it operated before now, was the greatest challenge of availability of cash to feed their ATMs when out of cash. The company struggled with banks in this area with little success as most of the owner banks have their own ATMs to support with cash. The Central Bank Of Nigeria did not help matters as they did not allow ATMC to source cash directly from CBN or put necessary steps in place for the take off of CIT companies rather they directed ATMC to source from the owner banks.
The Banks in their bid to render service to their customers started deploying their ATMS in all available spaces including public places like airport, Hotels etc as it was evident that ATMC before now could not muscle the financial strength nor have the Cash support to run the offsite ATM business.The CBN recently directed all Nigerian Banks to relocate the ATMs outside their business Office (better still hand over these ATMs to the IADs), in what many considered as a good step but wrong approach. In the build up to this decision, they mentioned that the banks were competing with the ATMs in the public places rather than render service and hence the need to regulate them and bring sanity into play. They also claimed that the decision will enable the banks to concentrate on their core business and free their staff for better service to the customers.
Good as their reasons and intention may sound, the IADs (Independent ATM Deployers) and the Banks are already confronted with the major concern of the ATM business in Nigeria. The availability of the raw material of the ATM business (Cash) required to support the ATMs so that the intention to get them running for 24/7 will be achieved. CBN in quick reaction by their Standards and Guidelines on ATM Teller Machine Operations in Nigeria released 2010 requested that the bank should continue to load the ATMs for the IADs after handing it over to the IADs.
The truth of the matter is that the absence of CIT Company in Nigeria will surely cripple this business if allowed to run the way CBN has proposed this business. The banks that will provision the cash for the IADs has their own ATMs to support first and foremost and now an added burden of rendering same service to the IADs with increased cost considering the security situation in the country. One wonders how the banks will recoup the cost of bullion van, police escort, dedicated staff for this function etc. We should also appreciate that sometimes these banks vault the money back from the ATMs to service the over the counter customers which will no longer be possible with this arrangement. Cash management will be become truly difficult for most branches with good number of ATMs offsite. This situation will force most branches/banks to begin to make preference and it is natural that they will prefer the ATMs within their absolute control.
One wonders what the exercise is all about considering the fact that bank staff are not freed any bit from these ATMs as canvassed by CBN before now. There is no provision of cash for the IADs rather, the bank were asked to continue to do the service now as a regulation rather than as service added to their customers. The issue of cash is central to the success of these offsite ATMs in Nigeria today and leaving the IADS fate to hang with the Banks who need these cash more is like postponing the doom days.
The increased cost of making this cash available for these ATMs is worthy of mention considering the fact that these ATMs are outside the business premises of the banks and require full complement of the bullion services especially in Nigeria of today. One wonders whether the bank will continue to incur this huge cost in the face of reduced profitability and high security cost. CBN must step into this and find a way to compensate the banks that has been forced to accept the role of CIT Company for the purpose of this ATM business for the offsite locations or better still put all necessary steps in motion to form an effective CIT COMPANY for this purpose as it is done abroad.
