By Tumininu Ojelabi Hassan
There are perceptible fears of job loss in the banking sector, as banks are devising measures to curtail overhead costs due to scale down in operation. A wave of massive layoffs may be looming in the banking sector due to the implementation of the cashless policy and transition into digital banking.
Having lost revenue amid cash crisis due to the shut down of banking halls, as instructed by the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) as a result of the vandalization of bank branches and properties by angry bank customers in Lagos, Ibadan, Abeokuta and Shagamu, reducing overhead costs is extremely crucial in this tough period.
Business operations have flopped in the past few weeks by virtue of the cash crisis. Private sectors, particularly manufacturing and SMEs, and the financial institutions have been greatly affected. Daily business turnover has plunged as Nigerians grapple with cash squeeze.
The Stanbic IBTC Bank Purchasing Managers’ Index (PMI) data compiled by S&P Global revealed that business activities dropped from 53.5 percent in January 2023 to 44.7 percent in February 2023. This is the worst record since the coronavirus pandemic in 2020, ending 31 months of growth.
According to Stanbic IBTC Bank PMI data, released by S&P, the cash crunch has resulted to companies reducing their purchasing activities and staffing levels. Data show that the amount of currency in circulation decreased by nearly 60% year-on-year in January, 2023 with little sign that the situation has improved significantly since then.
Muyiwa Oni, the Head Of Equity Research West Africa, Stanbic IBTC Bank, stated that the lingering cash shortage will likely continue to dampen economic activities and could depress economic growth in the first quarter of 2023.
“The steep decline is attributed to the cash shortage challenges experienced across the country during the month. This consequently resulted to contraction in both outputs and consumer orders, which made firms scale back on purchasing and hiring activities,” he commented.
Business Hallmark gathered that the cash crisis has triggered a quest for digital savvy employees due to the introduction of cashless policy. Banks are now venturing into the digital space, hence the hunt for tech experts in the banking sector. As a result of this, banks might be retrenching, especially in the cash unit of the bank as the cash crunch has made some staff members redundant.
A staff member of the United Bank for Africa (UBA) revealed that downsizing of manpower may occur but employees should endeavour to be relevant.
“The important thing in this situation is to make sure you are relevant. When an employee is relevant, he/she might not be retrenched, instead the person can be transferred to another unit. According to my bank manager, there’s a need to reduce workforce, this is the period to make sure you are extremely relevant to the bank to avoid dismissal.
“The cash unit of the bank will be cut down as we have less cash transactions now due to the cashless policy. Currently, our focus is on the Customer Service department and IT department, therefore more people are needed in these departments.
“Last week, two bank tellers were transferred from the cash unit to the customer service unit. This is as a result of the numerous complaints we have received in the past few weeks concerning failed transactions and we need more people to resolve customers’ transaction issues. Also, the customer service team has been overwhelmed due to more requests for ATM cards, opening of accounts, more people are needed in this unit,” he said.
He mentioned that the banks artificial intelligence chatbot, Leo has strengthened the technological capabilities of the bank.
“Concerning the IT unit of the bank, we have made efforts to improve our servers to ensure a hassle free banking experience. Leo has cut down the rate of failed transactions customers experience. Although, a lot of customers have been complaining but Leo enables customers make seamless transactions via WhatsApp, Facebook Messenger and Apple Business Chat.
“With Leo, customers can transfer funds, purchase airtime, check account balance, retrieve bank statements amongst other things. Also, UBA has two mobile applications, ‘UBA Mobile Banking and UBA Mobile App’ which has helped to improve our services. Currently we are working on strengthening our IT infrastructure to curb the upsurge in transactions,” he added.
The Association of Corporate Affairs Managers of Banks (ACAMB) revealed in a statement concerning the naira redesign, that 80% of Nigerians now enjoy digital transactions, such as Unstructured Supplementary Service Data (USSD) codes, Internet Banking/Mobile Applications, Mobile wallets, fueled by investments of over N100 billion by banks. However, the events of the past few weeks have proved otherwise, thereby reiterating the need for investments in the digital space of the banking sector.
Banks are adopting strategic cost management techniques, like Outsourcing, Reduction of operation hours and dismissing of staff. Outsourcing is an effective approach to reduce overhead cost as 60% of bank staff are contract staff, who do not enjoy the benefits of regular employees. The salary of a contract staff ranges from N50,000-N80,000, about a quarter of a fully employed staff. Their appointment can be terminated at anytime.
According to the data from National Bureau of Statistics (NBS), the number of bank staff dropped from 103,610 in 2019 to 95,026 as at December 2020 owing to the Coronavirus pandemic. Majority of the staff laid off were 5,552 contract staff while others were junior staff, senior staff and executive staff.
NBS revealed that banks recorded employees expenses and salaries amounted to N602 billion in 2021, a 14.57 percent increase from the N525.5 billion recorded in 2020. A total of 1949 staff lost their jobs causing a reduction of staff from 92,404 in the first quarter of 2021 to 90,455 at the end of the year.
In the first quarter of 2021, banks had 197 executive staff, 16,750 Senior Staff, 36,594 Junior staff and 38,863 contract staff. At the last quarter of the year, the numbers were 200 Executive staff, 16,390 Senior staff, 35,193 Junior staff and 35, 193 contact staff. Based on analysis, most of the workers dismissed were fully employed as the banks employed more contract staff.
According to the NBS unemployment and underemployment report for the fourth quarter of 2020, the unemployment rate rose to 33.3 percent from the 27.1 percent recorded in the second quarter of 2020.