For many Nigerians, the inability to easily transfer money or access financial services across different banks remains a frustrating experience.
Take the case of Emeka Nwakonobi, a business man in Onitsha, Anambra State who attempted to make a payment of his goods using his bank account via a third-party payment platform, but the transaction failed twice.
He reached out to his bank’s customer support and was told the issue was on the side of the payment provider, not the bank. The problem persisted, and he had to delay a crucial business payment.
“I’m really disappointed with how this whole interoperability thing is working out. I’m trying to pay for services that I’ve already signed up for, and the payment keeps failing. It’s not like the money isn’t being deducted—it is! But the platform is saying the payment didn’t go through. This has been happening for over two weeks now. It’s frustrating because I rely on these services for my business. The system is supposed to make payments easy, but I’m just facing constant roadblocks.”, lamented Emeka.
He continued, “imagine the government and the central bank of Nigeria telling us that we are operating a cashless society where in the actual sense they never even ready for am. To transfer money these days is like going to war.”
“I,m saddened because we are in a festive period, this is the time business people make a lot of money as customers are shopping for their christmas and new year shoes, bags, accessories and all, and i am stuck and helpless because a certain bank has decided to hold me hostage. I needed to restock.,” distorted Emeka lamented.
Emeka added, “It took almost five days of back and forth before I got my money reversed to my account, I can bet you already know that I didn’t make as much sales because the expected new products did not arrive as I could not pay my supplier.”
He believes the issue stems from poor integration between different banks’ systems and third-party providers. He suspects that these parties haven’t done enough to ensure seamless communication between their platforms, resulting in failed transactions.
Emeka however suggested that Nigerian banks need to better invest in secure and standardized digital public infrastructure—a unified, central platform for all banking services that ensures faster communication and fewer transaction failures.
“Banks should be forced to embrace a centralized payment system that can guarantee that payments are processed on time, without failures. A digital public infrastructure that works as a universal hub for financial transactions would save a lot of time and money for both businesses and individuals.”
Similarly, Chelsea, a student in Akure, has bank accounts with two different banks. She experienced multiple problems while withdrawing money from an ATM that wasn’t part of one of her bank’s network. Even though the ATM was supposed to be part of the shared network, her card was rejected multiple times. Furthermore, when she attempted to make a transfer from one of the banks to the other, the transaction failed after several minutes, and she was charged multiple times.
“This is really getting out of hand. I had to withdraw money at an ATM because I didn’t want to pay the high fee of using my bank’s ATM. The machine ate my card twice, and when I tried using another bank’s machine, the same thing happened. I even went to a different location, and the ATM still wouldn’t work! To make matters worse, when I tried to transfer money to my account, I was charged multiple times for the same transaction, but the payment didn’t reflect.”
Chelsea believes the issue lies in inadequate communication between the banks’ ATM systems and mobile apps. Despite the claim that interoperability should make banking services more accessible, the experience with shared ATMs and interbank transfers was anything but seamless.
She suggested that the Nigerian banking industry needs to prioritize improving the technical infrastructure that supports interoperability.
“The banks need to improve the communication protocols between their systems. There should be a central interface where all transactions can be verified instantly. If we want to see true interoperability, then it’s time the banks embraced better digital infrastructure that allows for real-time processing of transactions across different systems.
In recent years, Nigeria’s banking system has been making significant strides toward modernization, yet the lack of interoperability between banks has led to inefficiencies in financial transactions, leaving many Nigerians frustrated with completing simple digital financial transactions.
Analysts’ Responses to the Problem
Financial analysts argue that the lack of interoperability is an obstacle to the growth of Nigeria’s digital economy. According to Bankole Olaoluwa, a financial technology expert, “The banking system in Nigeria is fragmented. Consumers and businesses face challenges when transacting across different platforms, as each bank or financial institution operates in silos, making it difficult to integrate new technologies and services.”
Olaoluwa further emphasizes the importance of interoperability for both the Nigerian economy and the financial sector. “In today’s digital world, interoperability is key to unlocking efficiency, cost-effectiveness, and financial inclusion. This is especially critical in an emerging economy like Nigeria, where mobile payments and digital banking are essential to financial inclusion.”
Another financial analyst, Kike Ogunmola, who works as a consultant for several fintech companies in Nigeria, adds, “The inability of banks to effectively communicate and share information between platforms limits the ability of fintech startups to innovate. With proper interoperability, Nigeria could harness the potential of its fintech sector and build a more robust digital economy, improving both domestic and cross-border payments.”
Ogunmola believes that collaboration between fintech companies, banks, and regulators will be crucial in overcoming these challenges. “The problem is not just technological but also regulatory. There is a need for unified regulations and industry standards that ensure seamless operations between different financial systems.”
Banker’s Perspective
From the perspective of someone working within the banking sector, Tunde Adeyemi, a senior banker at one of Nigeria’s leading commercial banks, explains the internal challenges faced by financial institutions in ensuring smooth interbank transactions.
“While we have implemented several technologies to make our banking services more efficient, there is still the issue of lack of standardization across the various platforms. For instance, real-time payments work well within banks that have invested in similar technologies, but when a customer from one bank tries to transfer money to another bank, there are still delays and errors in processing. This is largely due to different banks having different systems with varying levels of integration.”
Adeyemi acknowledges the significant progress made in improving Nigeria’s financial infrastructure but also points out that much work remains. “The systems we have in place are effective within a single institution but become less reliable when interacting with other institutions that may not have adopted the same technology or infrastructure standards.”
Nigerian Interbank Settlement System’s Efforts
The Central Bank of Nigeria (CBN), recognizing the importance of efficient financial transactions, has been working on solutions to address interoperability issues. One of the initiatives put in place is the Nigerian Interbank Settlement System (NIBSS), which operates platforms such as Instant Payment (NIP) and the Nigeria Interbank Credit Settlement Scheme(NICSS).
These platforms have allowed for quicker fund transfers between different banks. However, despite their success, several hurdles remain.
William Uko, a senior official at NIBSS, explains, “While platforms like NIP have reduced transaction times and costs, they still have limitations in terms of reaching a broader range of services, especially for cross-border transactions and fintech integrations. Many Nigerians still face issues when trying to send money between banks or use international services.”
“As we look to the future, NIBSS is committed to fostering an interoperable financial system that meets the needs of every Nigerian. We believe that the adoption of Digital Public Infrastructure is not just a technical necessity; it is the key to unlocking the full potential of Nigeria’s financial sector. By embracing open systems, secure digital identity, cloud technologies, and blockchain, we can create an ecosystem that works for all.” Uko added.
He further said, “Financial inclusion is the cornerstone of our vision. Our goal is to create a banking environment where everyone, no matter their location or economic status, can access secure, efficient, and affordable financial services. The path to this goal lies in enhancing interoperability and building the necessary Digital Public Infrastructure to support it.”
“At NIBSS, we are committed to ensuring that Nigeria becomes a leader in digital financial innovation. Through collaboration, regulation, and the embrace of transformative technologies, we will enable a financial system that serves the needs of today and anticipates the demands of tomorrow.”
Uko emphasised that NIBSS is actively engaging with stakeholders to ensure that they see the long-term benefits of adopting interoperable solutions adding that theirs is a continuous move to update its protocols to ensure a more seamless experience for users. But analysts and banking professionals agree that more needs to be done.
The Way Out: Collaboration, Investment, and Policy Reforms
Analysts have suggested that the way forward lies in continued investment in digital infrastructure and collaboration between key stakeholders, including the Central Bank of Nigeria, commercial banks, fintech startups, and regulatory bodies.
First, there must be the development of a universal payment platform that integrates the various systems used by different banks and financial services. This would enable seamless interbank transfers and ensure that consumers and businesses can send and receive money without unnecessary delays or costs.
Additionally, regulatory frameworks must be updated to allow for open banking, which would encourage greater competition and innovation in the sector. Open banking policies enable customers to share their banking data securely with third-party service providers, allowing for more personalized and efficient financial services.
Investment in fintech innovation and partnerships with global players should also be a priority. Countries like India and Kenya have shown that investing in a digital public infrastructure can transform economies. With the right focus and planning, Nigeria can follow suit, ensuring that the benefits of a truly digital economy are felt across all sectors of society.
In conclusion, while Nigeria’s banking sector has made substantial progress, there is still work to be done to ensure interoperability, efficiency, and inclusion. By embracing digital public infrastructure, Nigeria can eliminate the barriers to seamless financial transactions and unlock the full potential of its growing digital economy.
The future of banking in Nigeria depends on a more integrated and connected financial ecosystem, one that places users’ needs at the forefront and embraces innovation for the benefit of all.
