Nigerians opened over three million more Current accounts than Savings accounts from January to April this year, figures from Nigerian inter-bank settlement system (NIBSS) has revealed.
Total number current account in banks in Nigeria grew by 3.33 million from 25.6 million in December 2018 to 29 million in April 2019. Representing a 13 percent growth. while the total number of Savings account grew by 0.18 million from 89.1 million to 89.2 million during the same period representing a growth of 0.2 percent. Of the total increase of 3.5million accounts in numbers, 95 percent is attributed to current accounts while saving account grew by 5 percent of the total.
This development has been attributed to continuous increase in inflation rate since January that has resulted in a surge in food prices. Nigeria Inflation rate currently stood at 11.37 percent rising from 11.25 percent in March 2019. Rising inflation reduces the propensity to save for individuals thus resulting in less need for new savings accounts and sometime dormant or customers’ request for closure of existing savings accounts.
The figures from NIBSS further revealed that only 60 percent of the total of 122 million bank accounts as at end of April 2019 are active while 49 million representing 40 percent are inactive. The inactive accounts are however growing faster than the active ones as the growth rate shows 2.5 percent and 3.8 percent from December 2018 to April 2019 for active and inactive accounts respectively. Banks treatment of inactive is a major factor for reasons for rise in the number of inactive account, see Nigerian Banker article on reasons for growth in inactive accounts
A Business Manager of an old generation bank (Felix Eshiebor) we spoke with, revealed that bank customers are hardly interested in savings account anymore. Majority of them open current account for the purpose of salary payment from their employers and as soon as salary is paid, the account is cleaned out until next pay day.
Mr. Eshiebor also mentioned the effect fintechs are having on bank savings account “A sizeable number of bank customers are aware of online savings platforms like PiggyVest, Cowrywise, NumeroUno and lots more and they are more conformable with the flexibility and easy daily alternatives those platforms offer. Some of them even allows daily savings of N500 or even less.
“The beauty of it all is that the fintech companies have accounts domiciled with the banks and that means that the deposit still remains with the bank but no longer in the savings account of customers”.