For several weeks, bank customers have faced challenges accessing their funds due to network disruptions linked to ongoing core banking application upgrades. Numerous transactions were unsuccessful, causing delays for investment firms in their operations, reports JUSTICE OKAMGBA.

System Upgrades Leave Bank Customers Frustrated

In an email, Optimus by Afrinvest warned customers that they might experience temporary transaction delays due to the downtime of the Nigeria Inter-Bank Settlement System (NIBSS) and certain banks.

The email stated, “We would like to inform you about some temporary delays in processing withdrawals. This is due to an issue with NIBSS, as 0well as downtimes from certain banks, including GTCO, Zenith, Sterling, Stanbic, and Standard Chartered. If your Optimus by Afrinvest account is linked to any of these banks, you might experience delays in receiving funds or depositing money into your wallet.

“We sincerely apologise for any inconvenience this may cause. Rest assured, we are actively monitoring the situation and will update you as soon as everything is back on track.”

Impact on Investment Firms

Investment firm i-invest, which focuses on treasury bills, stocks, and other services, also informed customers that a planned upgrade by its partner bank would affect operations.

The firm announced, “This is to inform you about a planned upgrade that may temporarily affect your transactions. To improve your experience, our partner bank will undergo maintenance, which may cause delays or disruptions in funding and withdrawals. The upgrade is scheduled from 12:00 am on Sunday, October 13, to 9:00 am on Monday, October 14, 2024. We apologise for any inconvenience this may cause and appreciate your patience.”

Customer Challenges and Banking Preparedness

In recent weeks, some banks have completed technology upgrades, while others continue to navigate ongoing migrations. These disruptions have left many customers unable to access essential banking services, raising concerns about the banks’ preparedness.

Before the widespread upgrades aimed at improving customer experience, banks relied heavily on foreign companies for IT management, incurring significant maintenance costs in foreign currencies. However, some financial institutions, like Sterling Bank, have begun transitioning to locally developed solutions.

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Sterling Bank switched from the Switzerland-based Temenos T24 system to SeaBaaS, an indigenous solution developed by Peerless. This migration, which started in August and concluded in September, left over 3 million customers unable to access banking channels during the transition.

“The migration process is inherently complex and daunting,” said IT expert and Head of Marketing at MIM Finance, Bobola Ojo-Ami. “Banks can never be 100 percent prepared; initial planning only equips them for what lies ahead. It is during the actual migration that they face the real challenges.”

Ongoing Disruptions

GTBank transitioned from ICS Financial Services to India’s Finacle system, warning customers of potential service disruptions on October 13. Meanwhile, Access Bank postponed its system upgrade, originally set for October 12, to avoid further inconveniences. Zenith Bank also faced login issues for three days after an October 1 update, while FirstBank customers encountered six days of digital service disruptions.

Ojo-Ami emphasized the importance of having a robust business continuity plan during the migration, which includes the ability to revert to the previous system if the new one presents significant challenges.

Importance of Communication

Customers have reported that some banks failed to provide advance notice before initiating upgrades. Frustrated users noted that these outages not only hindered access to services but also damaged trust in the institutions, which is crucial in banking.

Ojo-Ami stressed the necessity for banks to inform customers about temporary solutions or alternative assistance routes during the migration process. He argued that transparency would reassure customers that they are valued and that the bank is committed to serving their needs.

Contingency Planning

Artificial Intelligence researcher Enakirrerhi Truthful pointed out that many banks did not prepare adequately for worst-case scenarios during the upgrades. He highlighted how the disruptions affected personal transactions and business operations, underscoring the need for better scenario planning.

“This outage revealed a lack of contingency planning. What happens if things go wrong during an upgrade? Do we have a backup plan? For many banks, the answer appears to be no,” he said.

The Necessity of Upgrades

Aituaz Kola-Oladejo, Executive Director at Financial Services Innovators, emphasized that upgrades are crucial for optimizing resources, enhancing efficiency, and reducing vulnerabilities to attacks and fraud.

“I believe the upgrade is essential as digital technologies evolve and the volume of digital financial transactions grows exponentially. Financial institutions must conduct stress tests on the resilience of their systems,” Kola-Oladejo stated.

Timely Infrastructure Improvements

Abiola Jimoh, co-CEO of XChangeBOX, noted the need for timely upgrades to improve banking services. While upgrades are necessary, the delays in updating key systems are hurting customer confidence.

“Banks are working to improve their systems, but these upgrades should happen more regularly. Unfortunately, while we’ve made progress, we are still struggling with infrastructure,” he asserted.

Fintech Solutions

During the downtime, many customers turned to fintech platforms like OPay, PalmPay, and Monie Point for their transactions, reminiscent of the cash crunch experienced during the naira redesign by the Central Bank of Nigeria.

Jimoh praised the role of fintech in alleviating some of the pressure, noting that these tech-driven banks helped during the system disruption. “If not for the new banks and fintech players, the situation would have been much worse,” he said.

Significant IT Investments

In the first half of 2024, five major Nigerian banks collectively invested N178.77 billion in enhancing their IT infrastructure. This represented a significant increase of 203 percent from the previous year.

Zenith Bank allocated N23.10 billion for technology improvements, Wema Bank invested N1.13 billion, and UBA’s IT expenses surged by 248.20 percent to N6.70 billion. Access Bank emerged as the highest spender on IT, investing N111.24 billion, an increase of 264.55 percent from the previous year.

Conclusion

The digital transformation in Nigeria’s banking sector highlights the industry’s ability to adapt and prioritize technological advancements. While short-term challenges exist, these upgrades reflect a commitment to enhancing innovation and improving cost efficiency within the sector.