Sad tales of ATM’s users

Stories by Akin Adewakin, Lagos

Aderemi Babalola,
Minister of State for Finance

Dayo was on his way to Victoria Island, in Lagos, when he realised that what he had on him might not be enough to pay his way back. Fortunately for him, he had his ATM card on him with which ideally he should be able to cash money, anytime and anywhere the ATM facility is available, without necessarily having to pay a visit to the banking hall.

When his first attempt at cashing some money at the nearest bank via the card was not yielding the expected result, he quickly dashed to another bank where the machine would not also ‘release’ the funds. On getting to the third bank, he met one of the customers on the queue who was complaining bitterly about a text message he had just received from his bank that he had made some withdrawals which he argued he had not really done.

Sensing danger, Dayo decided to branch in one of the branches of his bank on the mainland to ascertain his actual balance and was stunned by the revelation. He was said to have withdrawn the sum of N5,000 twice from his account; an indication that the two attempts earlier made in the day to withdraw money was actually recorded as withdrawals by the ATM of those banks.

‘Though, an apology was tendered by the bank, with a promise of rectifying the problem in the next seven days, I was shocked that such a thing could happen at all. What would have happened if I had not really come to verify what I had in my account? And, ordinarily, I wouldn’t have come if somebody had not really complained about a similar problem’.

The above scenario represents the plight of an average ATM card user nowadays. When the Automated Teller Machine, ATM technology was introduced some years ago, it was meant to ease the problem of congestion in the banking halls and make the art of banking appealing to the public. While some described it then as a welcome development, capable of taking banking to the next level, others believed it was the ultimate solution to the harrowing experience an average customer passed through while trying to withdraw money from the bank.

And, after the successful reforms carried out in the banking subsector, the ATM technology was adopted by most of the banks as a way of letting their customers have values for their money, but since the introduction of the technology which many had seen as the only way of decongesting the banking halls, the Nigerian banking public had expressed their disappointments about the failure of the technology to really solve their problem.

According to Biyi, an undergraduate of a Federal University in Lagos, the technology sometimes could be a source of misery to its users. ‘For instance, there was a time I visited all the ATM stands in our neighbourhood and couldn’t collect money. I had to wait till the next day to queue at the banking hall.

Besides, some have canvassed for an increase in the number of the machines, arguing that the number of ATMs made available are not enough, resulting at times in long queues in front of the machines. ‘If we actually want to make the art of banking faster, why not provide more of the machines. For instance, nothing stops a bank from having more than one ATM point in its frontage’.

An official with one of the new generation banks in Lagos, in a chat with Nigerian Tribune, attributed some of the causes to the Nigerian factor. For instance, ‘In a country where there is no regular supply of electricity, and security is almost non-existent, such things are bound to happen. Until we are able to fix the problem of power in the country many things may not go right and the ATM is no exception.

For instance, there may be power failure on the point of withdrawal. Though there is an inbuilt power system that provides a back-up power system, don’t forget it is a machine, anything can go wrong’.

He advised that any customer that experiences this should make a formal report which would be looked into. Moreover, he argued, it is a relatively new technology which is bound to have its ‘teething’ problems, adding ‘these few cases are not enough to condemn the technology outright’.

But, Seun Ajibola, a businessman, blamed some of the problems on ignorance on the part of the customers. For instance, he argued, ‘some of them are not well schooled on how th use the card.

They wouldn’t follow the laid- down instructions, instead they will be busy blaming the machine for their own lapses’, stressing that since the introduction of the technology few years ago, it had never failed him once.

As positive as Seun’s remarks are, not a few believe that there is the need to improve on the technology for it to be able to serve its users well. For instance, the problem of lack of cash for withdrawals, security and inadequate power supply, must be fixed for the users to really optimize the benefits of using the card. This is definitely a relatively new technology that must be allowed to stay.

US investors test faith in State Street Corporation

FORCED over the last five months to face icky truths about the credit crisis, investors seem to believe we are near the end of a disturbing interlude. How else to explain the 8.2 per cent rally last Thursday in shares of the State Street Corporation after it said it would seek fresh capital and add $618 million in reserves to cover lawsuits over subprime mortgage investments it made for some clients?

Normally, the disclosures by State Street, custodian of $15.1 trillion in investor assets and manager of $2 trillion for clients, would not qualify as good news. Raising capital means diluting existing share-holders, after all. And most of the financial institutions that have had to seek capital recently have given their new investors hefty discounts.

It’s also not a positive sign that State Street is adding the reserves to settle lawsuits contending that it breached its fiduciary duties to clients for whom it bought subprime securities. Only last October, it said it would defend itself vigorously against one such lawsuit that the Prudential Retirement Insurance and Annuity Company filed against it in Federal District Court in Manhattan. Prudential contended that it lost $80 million after State Street Global Advisors and State Street Bank and Trust engaged in “deceptive, imprudent and incom-petent” investing in two nominally conservative bond funds.

State Street said last week that it had changed its stance on such lawsuits to put the issue behind it. The stock hit a new 52-week high of $85.37 on the news. While it fell on Friday, closing at $81.82, it was up 1.4 per cent on the week.

Stock market investors are ever the optimists. The question is whether or not their enthusiasm is justified.

To be sure, State Street’s primary business admini-stering customers’ trades and keeping custody of their assets makes it less likely to be hurt by debt market troubles than, say, financial institutions that underwrite these securities. And State Street managers’ upbeat report on 2007 results in their conference call on Thursday certainly gave investors and analysts a good deal to be sanguine about.

Nevertheless, now seems a peculiar time for share-holders to suspend their disbelief about the full impact the continuing credit crisis might have on financial services stocks, even models of New England rectitude like State Street. After all, how many initial estimates of losses from big financial institutions in recent months were later shown to have been too modest?

And does it make sense to retain a blinkered faith in financiers’ abilities to corral risk - as if it weren’t the unwieldy and surprising beast it often turns out to be?

Designing convoluted securities out of simple mortgage loans, Wall Street’s wizards thought they had managed to offload all their risks to others. But the rocket scientists forgot this: for all their magic and ingenuity, structured finance pro-ducts do not eliminate reputation risk. Many of these tarnished securities are boomeranging, either in lawsuits aimed at companies that sold or recommended them or in the repatriation of assets from off-balance-sheet entities.