Intercontinental bank plc had an IT problem that lasted for two days. That period people could not withdraw because of the IT problem. People and money – customers started panicking because they could not withdraw.
This lead to the rumor that the bank is not healthy. IT failure is common in Nigeria. We do not yet have the infrastructure to run a stable IT network. It can happen to any company – oceanic bank experienced the same problem sometime last year. Sometimes, GSM network in the country go down.
The increase in the minimum balance required for a savings account is as a result of a study conducted by a consultant hired by the bank. To understand this more I will use Spring bank as an example:
As at last year, for every account opened in spring bank, the company that owns the software they are using gets three dollars ($3). This is not a one off fee ($3 per account). Every year, the bank renews the license. So if you count the number of accounts the bank has, multiply it by $3 and you get what the banks pays. What this means is that if you open a spring save account which one can open with one hundred Naira (N100) and not utilize it, the bank is actually making a loss on that account.
After the study, Intercontinental bank discovered that about seventy percent of the resources spent on running/maintaining accounts every year goes to non-profit yielding accounts. I do not know the new rate of software license. But for a one thousand Naira account or worse still a dormant account, the bank cannot and is not making anything on it.
If am to go further, a lot of people run savings account like current accounts. i.e pay in money today, withdraw that same day or the next day. The bank is not making anything from such accounts. In a savings account, banks make money only if you leave money with them for sometime. Hence, banks like GTB introduced COT on savings account when they sent out this message:
“As part of our continuous effort towards providing you with superior customer service; and promoting an appreciable savings culture, we wish to inform you that with effect from October 01, 2008, the bank will commence the deduction of commission of N5.00 for every N1,000.00 withdrawn on the following types of transactions:
• N250, 000.00 and above, transferred from Current Account to Savings Account and withdrawn on the same day of transfer.
• Cash withdrawals of N250, 000.00 and above, withdrawn from Savings Account on the same day of lodgment.”
Is not better to increase the minimum balance on your savings account than for the bank to start charging you COT on your savings account?
Mr. Dayo and Mr. Godwin, intercontinental bank is a very solid bank and is not in any financial distress. In fact, they are the second biggest bank in Nigeria after first bank by a recent rating by a foreign agency. The fear/panic of them failing was exacerbated because unfortunately the text massage of the increase in minimum balance was wrongly sent when the bank was having IT problem and could not pay people. That decision of increase in minimum balance they have wrongly reversed in my own opinion.
Best Regards,
Kenneth Okonkwo
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