Why Banks now rely more on contract staff

Banks in Nigeria are now relying more on contract staff to handle routine operational activities while it leaves core banking activities such as trading, treasury, loan making to permanent employees, National Daily has gathered.

This, National Daily learnt, is expected to help reduce overheads, especially as it relates to personnel cost.

The recently published data on Sectorial Breakdown of Credit, ePayment Channels and Staff Strength (Q2 2018) shows the banking sector employed a total of 43,955 contract staff as employees. This compares to about 21,837 a year earlier and a 101% increase YOY.

Banks that have a higher percentage of contract staff to total staff will likely save more on overheads and can pass these cost savings to shareholders. However, this depends on whether some of the so-called cost savings are being shifted towards executive and senior staff compensation.

In terms of employment opportunities for Nigerian Youth, this suggests the days of getting a bank job straight out of school is diminishing. Except for specialized Graduate Management Trainee programs, most fresh graduates will likely be employed as contract staff.

According to a data made available to National Daily, the percentage of contract staff in the banking sector has risen from 26% at the start of 2017 to about 43.2% in 2018.

National Daily learnt that in the second quarter of 2018, contract staff jumped from 32,013 in Q1 of 2018 to 43,955 in Q2 of 2018, indicating that banks employed a whopping 11,942 contract staff in the second quarter alone.

It was also gathered that a number of newer outsourcing companies are also springing up to provide contract services for the banking industry. Most utility companies in the telecoms and power sector already rely on contract staff for their operations.

Meanwhile, incessant cases of fraud are being linked to contract staff.

In a recent fraud which occurred in tier 2 commercial bank, a staff of the bank informs National Daily that some of the contract staff are exposed to core operations of the banks such as cash and cheque handling and also have access to delicate customer information that makes the bank vulnerable to fraudulent activities.