THERE are indications that the Central Bank of Nigeria’s (CBN) policy on off-site Automated Teller Machines (ATMs) is again at risk of being derailed. This time the issue is not the commercial banks’ reluctance to comply with the policy rather it is complaints by Independent ATM Deployers (IADs) - independent ATM firms licensed by the CBN to deploy ATMs in places other than bank premises - that they are not finding the scheme profitable and may withdraw from the project.

The off-site ATM policy was originally issued in March 2008 and, according to the apex bank, was to ensure that commercial banks restricted the installation of ATMs to their premises while leaving the installation of the machines in other places such as supermarkets, airports, hotel lobbies, colleges, cinemas and so on to the IADs. Banks, which did not want to relocate their ATMs, were given the option of entering into a deal with IADs on how to jointly manage the machines. But most financial institutions’ inability to meet the original August 31, 2008, CBN deadline for the relocation of the off-site ATMs made the CBN to shift it to August 31, 2009 and eventually, to March 31, 2010.

However, most banks still failed to meet this deadline leading the CBN to issue an ultimatum in February this year to financial institutions to comply with the ultimatum or pay a fine of N50, 000 per week, until compliance is established.

But having taking over the off-site ATMs, the IADs are now lamenting what they say is the unfavourable business environment. Investigations by The Moment reveal that the IADs are agitating to be allowed to increase charges on transactions on the ATMs, which they operate and have told the industry regulator that unless it accedes to their demand, they could pull out of the arrangement.

A top bank executive with a leading new generation bank who did not want to be named, told The Moment that due to the IADs’ stance, the CBN had already informed banks that the policy would be reversed and that they (banks) could return to operating the off- site ATMs. He noted: “At the last Bankers’ Committee, the CBN governor noted that the IADs had not been able to live up to expectations and as such the apex bank had decided to reverse the policy.”

The Moment learnt that the IADs had complained that they were not recording the right volume of transactions on the off-site ATMs that would enable them recover costs and make profit. An industry source said: “The IADs are asking the CBN they should be allowed to charge N150 per ATM transaction. But even if the CBN grants this request, they (IADs) will not be able to compete with the banks which charge a maximum of N100 per transaction on their ATMs.”

According to the source, the IADs do not have the same resources that banks have to absorb the cost of moving cash and maintaining ATMs.

In a chat with The Moment, the managing director of Chris Technologies Limited, an IT firm, said the CBN was wrong in the first place to have formulated the off-site ATM policy. He regretted that despite protests by banks, the CBN stuck to its guns that the financial institutions should remove the offsite ATMs.

He posited: “It was obvious that banks owned a good number of the over 8,000 ATMs installed nationwide, and that the IADs did not have the capacity to install and maintain ATMs in this big Nigerian market. Many of the firms that were licensed as IADs were hurriedly established by people who wanted to take advantage of the hard work of banks who expended a lot of resources in installing and promoting the use of ATMs. So after making banks to incur massive costs in relocating their ATMs, the CBN is now realising that the policy is not feasible. Is the CBN going to compensate the banks?”

The Head of Information Technology in a first tier bank who refused to be named, acknowledged that many banks absorbed a lot of losses in dismantling and relocating off-site ATMs. He, however, noted that the reversal of the policy would be welcome news to the industry as banks were never really happy entering into forced working arrangements with IADS on off-site ATMs. He said: “ We warned then that the IADs will not be able to cope, but the CBN did not listen us. I always knew that all the excuse that the CBN gave that the policy was to avoid the overcrowding of public places did not hold water. I knew some people just wanted to make quick bucks.”

The bank top official pointed out there could however be other reasons why the CBN is planning to reverse the policy. According to him, “there were speculations that an IAD promoted by the chief executive of a frontline IT company as well as a former chairman of a leading first generation bank had played a major role in bringing about the off-site ATM policy, because they had plans of flooding the country with thousands of ATMs. Maybe, their plans fell through and there was thus no need for the CBN to proceed with the policy.”

It would be recalled that three companies were licensed by the CBN to provide ATM services at non-bank locations. The oldest of them is the ATM-C, owned by eight Nigerian banks: Afribank, Diamond Bank, Fidelity Bank, First Bank, UBA, Union Bank, Wema Bank, Zenith Bank as well as Accenture. The company was set up in 2004 with the sole mandate to deploy a network of over 2,000 shared ATMs in non-bank locations across the country. The company operates the QuickCash ATM network which has an installed ATM network capacity of about 1,500. The other two companies which only received their licences on December 14, 2009, to deploy ATMs in non-bank locations across the country were Chams Access Nigeria Limited and Cooperative Support Services Limited.

Available figures indicate that out of the about 9,000 ATMs installed in Nigeria so far, the ATM Consortium accounts for just 145, which translates to 1.7 per cent.
In comparison, UBA leads in ATM deployment with 1,577; followed by Intercontinental Bank, 1,327 and First Bank with 1,065.

Other leading IT experts in the industry had, also, faulted the CBN’s decision, stressing that banks were not consulted before the directive was issued. For instance, ATM was introduced into the Nigerian market in 1989 with the first ATM being installed by the national cash registers (NCR) for Societe Generale Bank of Nigeria Limited (SGBN) in the same year. Currently, there are about 8,100 ATMs on the InterSwitch network.