Inside Zenith Bank’s week-long downtime

Nigeria's biggest banks leave customers stranded

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Poser: Nigerian banks continue to struggle with retaining developers, as foreign companies develop a taste for hiring across continents. When are we going to have that conversation about having a talent pipeline for developers?

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And there we have it: in the week that Nairametrics adjudged Zenith Bank (1st) and UBA (7th) to be Nigeria’s top banks, customers of both banks were unable to use banking services for days. Lola, a friend of mine who uses Zenith, told me that she couldn’t transfer money or make payments with her debit card. 

True to form with most Nigerian banks, there was no explanation or communication about the downtime that left millions of customers stranded. On Wednesday, Lola walked into a banking hall and withdrew all of the money in that account. It puts into perspective why digital upstarts are trying to disrupt Nigerian banking.

Sure, Kuda Bank’s debit cards fail so frequently at POS terminals that it has become the butt of jokes, but the bank can at least claim that it communicates. A recent interaction on my Twitter timeline where one user complained that Kuda was always notifying him of downtimes highlights this point. Traditional Nigerian banks treat service downtimes like minor inconveniences that don’t matter. Digital banks take the opposite approach, and customers who are used to receiving no explanation from traditional banks, are puzzled. 

Beyond communication, what’s behind the week-long downtime? A source with knowledge of the situation told me that a mix of staffing and infrastructure challenges are responsible for Zenith’s downtime. Zenith bank recently completed an upgrade, reportedly merging its businesses within its banking solution without scaling up their infrastructure to handle the increased load. Other sources confirmed that it’s common for banks to move ahead with changes like this without allowing their technology department to smooth out all the rough edges. It’s consistent with the observation of some customers that the downtime started when they upgraded their banking apps.

Many technology departments struggle because banks are having a hard time holding on to developers. A TechCabal report on GTCO connected employee attrition to service downtimes and transaction failures. Although there’s no way to independently verify the exit rate of developers, sources say that UBA and Zenith are dealing with the same staffing problems as the rest of the Nigerian banking industry. “One unit in Zenith bank had to be collapsed because three developers left.” Last year, I even talked about a company that lost an entire department to a Canadian company. Besides the problem of retaining developers, the absence of site reliability engineers–specialists in monitoring and stabilizing services in production—is another challenge. 

UBA’s downtime was partly mitigated by the fact that the bank has two mobile banking apps managed by different teams. The old app is reportedly managed by the bank’s internal team while the new app is handled by a foreign firm. Because UBA has two mobile banking apps, some UBA customers are still able to complete their transactions despite their infrastructural challenges. 

UBA has two mobile banking apps. 

Regardless of the present troubles, traditional banks retain an edge over digital-only challengers. Even with service downtimes, people like the assurance of knowing that a physical bank branch is accessible. For many millennials, who use these traditional banks as salary accounts, that assurance is critical. But some of this is changing, with digital banks incentivising customers to move their salary accounts in order to access loans and other perks. 

In the end, traditional banks will do well to remember that with such a small addressable market—this article put the total serviceable market as somewhere between 3-6 million users— all players are fighting for roughly the same subset of customers. Superior digital experiences will be a key determinant of who the biggest players will be in the next decade.

It’s down to Zero 

Last week, FCMB sent an email to inform customers that its generous $20 limit on international transactions for all Naira debit card holders is now down to Zero. That means, if you use FMCB, you will not be able to buy anything from Amazon or even do simple things like pay for Instagram ads for your business.

While other banks still have a $10-$20 monthly limit for international transactions, the follow-follow nature of Nigerian banks and the fact that they all operate in the same environment where FX liquidity is an issue means you can expect similar directives from other banks in the coming months. It won’t help that Nigeria’s capital inflow for Q1 2022 was $1.57 billion, a 28% decline from the same period last year. 

There’s no doubt that Nigeria’s current FX policy regime is unsustainable; the real question is when the CBN will do something about it. My current bet is on some kind of devaluation before the end of the year. 

What I’ve been reading

After a dramatic email to staff mandating them to come back to the office or get fired, Elon Musk’s Tesla has now revealed it will pause hiring and lay off 10% of staff. 

This report from Abubakar Idris says that Bolt drivers in Nigeria are illicitly selling their accounts, putting passengers at risk

Moving to remote work has brought out the worst in some managers. It's revealed their insecurities and paranoia and caused them to address these in a spectacle of incompetence.

This Financial Times article argues that it’s okay to be quiet in meetings; you can now be sure that no one will ever hear my voice on a Zoom call again 

Edited by: Alexander Onukwue & Jimi Osheidu

See you on Sunday!