70% Of Bankable Adults Keep Money Away From Banks - Report

Citing corruption, instability and distrust within the
banking system, 70 percent of bankable adults in
the country still preferred to keep their money away
from the banks, a report sponsored by the Centre
for Finance, Law and Policy (CFLP), Boston
University has stated.

The study, which centered on “Consumer
Perceptions and Saving Behaviour” of Nigerians in
the aftermath of the 2009 audit of commercial
banks by the Central Bank of Nigeria (CBN), stated
that respondents were more concerned about banks’
reputation and stability as determining factors in
their choice of banking.

The 2009 audit had among other things, revealed a
third of the existing 24 commercial banks were
critically insolvent.

Authors of the report-Assistant Professor of
Economics, Boston University, Kehinde Ajayi and
Researcher, African Studies Center, Boston
University, Dr. Omale Ali Garba said the objective of
the study was to understand what factors influence
people’s disposition to using the formal banking
system for financial services.

Ajayi said although the Nigeria Deposit Insurance
Corporation (NDIC) claimed the Central Bank of
Nigeria (CBN) had sufficient information about the
banks on its website for people to access the
information relating to the health of financial
institutions, most Nigerians still don’t have access
to these critical information.

“We also made the point that some people in the
villages don’t have access to the Internet and so
can’t go online to look for such information about
the banks,” she told THISDAY at a workshop in
Abuja.

The report further said there was lack of information
on how the banks are doing.

Ajayi said: “A key message for the regulators is the
fact that people are not aware, even though they’ve
been doing a lot to make the information available,
by publishing it on the websites…most people are
not aware they could go and find out about how
their banks are doing.”

She said: “They should think about sharing that
information more widely, encouraging people to be
financially literate because banks are competing for
consumers and should know that if they are not
behaving well, the costumes would go somewhere
else, and so they will try to behave in a more
responsible manner.

“People care about stability but they don’t have
access to the information. Most people also say
the reason they don’t have a bank account is that
they don’t have money; because they don’t have
regular income.

But at the same time, a lot of people say they’re
saving money which means they must have money
they are choosing not to put in the banking system.

I think it’s a combination of people having enough
money…increasing level of income reduce poverty
when people have more money, then they’ll be
more willing to put in the banks.”

Participants further raised concerns over what they
termed as excessive bank charges which had
discouraged individuals from patronising the
banking system while others chided the banks for
putting out complex requirements for owning a bank
account.

A participant said the banks often deceived
customers into signing documents which they only
know their implications only after it’s rather too
late-giving the banks leeway to fleece their
customers.

Among other things, the report called for increased
financial interest and literacy in order to increase
trust in banks and reduce the negative
consequences following a financial crisis.

It said regular information about bank stability and
practices would increase consumer welfare and
incentivize banks to maintain integrity in order to
retain customers.

It added that poverty reduction was likely to
increase as more people develop a stronger ability
to save in banks.

http://www.thisdaylive.com/index.php/2016/06/30/
report-70-of-bankable-adults-keep-money-away-
from-banks/