The Automated Teller Machine (ATM) has moved from being a mysterious machine to a basic tool of business transaction. But it is at the heart of online frauds and internet scams, thereby making many to be weary of the ‘machine that spits cash at the punch of just four digits’. According to experts, more needs to be done to improve its end-user experience, LUCAS AJANAKU reports.
To some people, President, Nigeria Internet Group (NIG), Bayo Banjo is an iconoclast of a sort. Speaking on the spate of cybercrimes in the country against the background of the Cashless regime of the Central Bank of Nigeria (CBN), he said he does not use automated teller machine (ATM) card and would never advise anybody to do so. His reason: The lenders have cleverly injected clauses in the ATM card request forms that extricate them of liability should a fraud occur.
But sharing his experience, Group Chief Executive Officer, (GCEO), Computer Warehouse Group (CWG), Austin Okere, said his wife and many others like her, who have vowed never to test the efficacy of banks’ assurances on the safety and security of their ATM systems against the increasing ingenuity of fraudsters have now become unwilling converts. This he said is due to the higher risk of being shut out of modern day transactions. Regulatory pressures such as the CBN’s cashless policy have also played their part in this conspiracy against financial conservativism. There are now penalties on cash transactions beyond a certain threshold. Thankfully, she has broken ranks and acquired an ATM card just only last year, he said.
According to Okere who is also an Entrepreneur in Residence, CBS, the CBN has tried to allay fears by compelling the banks to put additional security measures such as the installation of anti-skimming devices and two cameras on all ATMs. The rationale is that a fraudster who covers both cameras with his hands to avoid detection will have no spare to conduct his nefarious activities.
The average customer experience of ATM user is still a tale of woes, mostly self-inflicted, and inadvertently by the same banks in whose major interest it should be to drive its adoption to cut the high cost of serving customers within the branch. For example, it was reported that on Christmas eve last year, customers looking for ATMs to withdraw cash in Gbagada, a Lagos suburb, could not. All they saw on the ATM screen was: ‘Temporary out of service’or‘Unable to dispense Cash.’ The only ATMs that seemed to working on the whole axis were that of UBA at the Charlie Boy Bus stop. Of course, the queue had built up to the extent that faint hearted customers rather opted to go without cash than risk the possible consequences of a stampede. Similarly, on December 14 last year, there were reports that virtually no ATM worked in the Badagry area of the state.
Policy summersault
Okere said these experiences are exacerbated essentially by the following factors; firstly, stagnation in the ATM population in spite of significant adoption rate. The ATM population in the country has been stuck at the 11,000 mark for the past six years, resulting in an average of 11.39 ATMs per 100,000 adult population (adult population in Nigeria being about 56 per cent or 95.2million according to a World Bank report on population).
This is not unconnected to the CBN’s misadventure with the Independent ATM Deployers (IAD) experiment of 2008 that barred banks from deploying ATMs outside their branches. This resulted in the sudden halt in the momentum of ATM deployment by banks. “This was largely due to the hasty conduct of the CBN in trying to swallow an elephant at one go. Noble as the intention was, a pilot scheme would have uncovered the soft underbelly of the strategy, the major shortcoming being the fact that the cash in the offsite ATMs would have been too expensive for the IADs to carry, and therefore compel them to charge customers very exorbitant rates or render them totally unprofitable at the flat rate of N100 per withdrawal then allowed by the CBN,” he said.
Six years later, there are less than the 11,800 achieved at the highpoint because many banks had to abandon the long term rents secured for their offsite ATMs and wheeled the ATMs into warehouses and parking lots because the IADs could not afford the book value to take on the sites and ATMs. The operational lives of those ATMs, about a third of the total volume, were cut short, as they were subsequently unusable two years later when the CBN rescinded her decision, Okere lamented.
Comparatively, Indonesia with an adult population of about 90million, more than doubled their ATM installed base from 16.7,000 in 2011 to 36.5,000 in 2012, resulting in 37 ATMs per 100,000 adult population, about three times the ATM per adult capita in Nigeria. South Africa has 60 ATMs per 100,000 adult population, while the United Kingdom (UK) has 124 ATMs per 100,000 adult population. Nigeria clearly has a lot to do as the largest economy in Africa after the GDP rebasing.
Challenges
He said the quality of notes in the ATM are a far cry from standard. In the early days, the ATM was where to go if you wanted crisp notes. Today, the notes in the ATM are sometimes worse that the change you receive at the flea market. This is underscored by the fact that the security features and the general quality of the naira could do with some enhancements. Dirty notes generally cause paper dirt to be lodged in sensitive parts of the ATM when it is dispensing cash, therefore resulting in more frequent system faults or currency jams. When the work rate of the ATM in Nigeria is compared to that of the UK, it is clear that the Nigerian ATM dispense on the average five notes to one in the UK, if it is dispensing N1,000 notes and the UK one is dispensing £20 notes (£20 is approximately N5,000). This coupled with the low ATM density and challenged note quality contributes a lot to the frequent breakdowns and ‘unable to dispense cash’ notices.
He argued that most ATMs are not under any guaranteed service level support programme. This is very shocking, and a serious anomaly by any stretch of the imagination. Banks inadvertently encourage this malaise. There is a notion that appraisal and compensation for ATM support heads in the E-banking departments seem to be heavily skewed on how much they can save in the ATM support costs. So they devise all means necessary to achieve this, even at the detriment of customer experience and the banks’ brand erosion. There is a blatant refusal to sign any Service Level Agreements (SLA) support for the ATMs in the first year of purchase under the illusion that warranty on the systems equates to SLA support. This results in fallacious claims of reduction in support costs.
This alluded cost efficiency cannot be further from the truth. Warranty and SLA support are quite different from each other as any owner of a car under warranty well knows. While SLA defines the time within which an ATM should be fixed or replaced in the event of a fault (usually two hours within urban areas and six hours in remote areas), warranty relies on a best effort basis for the replacement of factory defective parts.
Parts that are rendered unusable due to wear and tear, or as a result of exogenous effects such as power surges cannot be claimed under warranty (as sometimes the bank officials are wont to ferociously argue). For simplicity, warranty on ATMs is very similar to that on automobiles. If you drive your new car which carries a three year or 100,000km warranty to the dealer for a part replacement. Firstly they check that it is not normal wear and tear, and that it is not due to abnormal circumstances such as the wrong type of fuel or an accident. Then they take in the car and order the part. They call you when the part arrives, which takes an average of three months, and then slap you with a labour bill. This is the type of service that the Bank is hoodwinked to render to their hapless customers. It is worthy to note that warranty does not cover periodic maintenance of the machines. Imagine driving your warranty car for three years straight or 100,000km without any service or Oil change! Not opting even for the bare bones labour-only quarterlypreventive maintenance service does drastically shorten the lifespan of the ATMs. It is therefore not surprising that some relatively new ATMs needlessly break down and cause customers to spend eternity looking for a working one, or in an endless queue.
The average annual support-spend on an ATM in Nigeria is $2,500, about half of what obtains in Indonesia and South Africa, both spending about $4,500 per ATM per annum. By investing the right amount to keep their systems properly maintained, they prolong the lives of their ATMs and ensure better customer experiences, which we readily testify to when we visit those countries.
Most ATMs work with windows operating system. Many are currently on the Windows XP operating system (OS) which has recently been announced by Microsoft as de-supported, and a new OS, Windows 7, announced to replace it. This means that any ATM that is not upgraded to the Windows 7 OS shall be vulnerable to viruses and fraud attacks, since the new security patches shall not work on them. Globally, 2.2million ATMs are vulnerable. In Nigeria a significant number of the installed base shall be affected. The solution is a simple upgrade of the operating system if the ATM is upgradable. This is free if the bank has been paying its software maintenance fee. They will otherwise have to incur huge capital costs to repurchase the new software licenses. “Available data suggests that many banks have not kept up with the software support fees. A further complication is that certain category of ATMs cannot be upgraded because of non USB Interfaces. These have to be replaced, and will further deplete the already stretched ATM density,” he said.
Again, there are serious challenges in stable and consistent power supply, and network connectivity, both of which the ATM cannot operate without. There are also infrastructure challenges in access roads to ATMs in rural areas which cause support engineers to spend significantly more ‘travel time’ than ‘dwell time’ to fix machines. A possible solution will be for service providers to have enough support offices across the country than depend on engineers being dispatched only from the three commercial centers of Lagos, Port Harcourt and Abuja. Cross training support engineers on ATMs, inverters and network connectivity will ensure that the first engineer to arrive at the ATM can fix the fault and does not have to call another specialist. A monitoring system if installed by the provider would ensure that the ATM correctly diagnoses itself and advices on the correct spare part to be carried to site. A monitoring system will however, require client licenses on the ATMs for which maintenance fees are due to be paid, and which many banks shy away from.
Banks are by no means the only clog in the wheel of good ATM customer experience. Some of the blames lie squarely on the shoulders of the service providers. In a bid to win business at all costs they are ready to accept terms that tempt them to cut corners in quality of products and service delivery. For example, there is a need to install monitoring systems and a call centre to aid support efficacy. There is also a need to ensure that the custodians are sufficiently trained to provide the crucial first level support. The negligence of these will make the support process expensive, unwieldy and ineffective. This drives the proverbial ‘race to the bottom’ for all stakeholders. A decimation in the number of service providers or their replacement by uncertified operators willing to collect the cutthroat rates offered by the banks will not bode any good tidings for the banks nor their customers.
Another emerging class in the clog of ATM availability is the gang of Marauders who attempt to blow-up the ATMs to gain access to the cash in the safes. For this group, Banknote staining could be an effective prevention technique, in which the anticipated reward of the crime is removed by denying the benefits, by marking the cash stolen with special security ink. Of course the ink should be machine detectable to ensure that deposit machines reject stained notes.
Some customers are also culpable. Furiously banging the ATM when ‘it swallows your card’ or does not dispense the money on your transaction will not solve any problem. If will only compound the problem by taking the ATM out of service. In the rare instance of this anomaly, the right thing to do is to call the number on the ATM body or visit the bank. There are usually journal entries and time stamps that will prove that you were not paid what you have been inadvertently debited, and a routine for redress and refund instituted, Okere said.
While acknowledging the significant progress that has been recorded in payment systems, underpinned by the opportunity for the average Nigerian to be availed of having access to the global installed base of ATMs, courtesy of his local bank ATM card, and without recourse to a foreign bank account and ATM card, there is still the need to ensure that charity truly begins at home.
