IN the light of the recent banking crisis that ravaged the financial sector and with the attendant credit squeeze, Nigerian banks and the Central Bank of Nigeria (CBN) are moving towards entrenching retail banking culture to at least improve on their bottom-line.
Retail banking is a typical mass-market banking in which individual customers use local branches of larger commercial banks. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards and certificates of deposit (CDs).  Retail banking refers to banking in which banking institutions execute transactions directly with consumers, rather than corporations or other banks.

 Why retail banking
“In 2008, retail banking activities accounted for 55 percent of the revenues generated by the 140 banks on our (global) database, up from 45 percent in 2006”, this was the conclusion of Boston Consulting Group, January 2010.
Michael Lafferty, chairman of Lafferty Group, a global financial industry intelligence and research firm has said the licensing of retail-only banks will be a sure way for the development of the Nigeria’s financial sector and the economy, as the CBN gets set to licence specialised banks after it abolished Universal Banking. Although retail banking has become the choice globally, he said with the CBN move, Nigeria may be the first the world over to license retail-only banks. 
He identified the global financial institutions that embraced retail banking and made huge success of it to include Citibank, Stefan Kaminsky’s KKB in Germany, Banco Popular in Spain, Cetelem in France and Bradesco in Brazil.
Lafferty said within five to ten years, most of the profits of Nigeria banks will come from retail banking and consumer financial services, just like banks in most other countries. Lafferty Retail Banking report says Nigeria is now the sixth fastest-growing consumer finance market worldwide, joining the first five which include Ukraine , Romania, Venezuela, Russia and Turkey .
Coming behind Nigeria in the list of ten fastest-growing consumer finance markets worldwide are Vietnam, India, Slovakia and Qatar. Using a growth parameter, Compound Annual Growth Rate (CAGR), the research carried out by global financial industry intelligence and research firm, Lafferty Group was based on a universe of 65 markets worldwide.
Lafferty Group in the research showed that consumer indebtedness was evaluated as ratio between consumer finance outstanding and personal disposable income including mortgage and non-mortgage outstanding. According to the research, Nigeria is now one of the most attractive emerging markets for retail banking in the world today and will soon be seen internationally in the same league as Russia, Indonesia, India, Brazil and South Africa.
According to him,universal banking failed in Nigeria due to lack of interest shown by the banks in consumer or small and medium enterprises (SMEs).Other reasons he identified for the failure of the universal banking model were speculative deal making culture at the top as well as the domination of the boardrooms of the universal banks by corporate and wholesale bankers.
Universal banking became a disappointment in Nigeria and the global financial market, said the expert, by other factors such as the disappearance of the barrier between retail and investment banking in the 1990s as well as the takeover of universal banks by investment bankers. “Consumers were ‘used and abused’ to serve the purpose of the investment banking divisions just as mis-selling and predatory pricing became the order of the day under universal banking,” said Lafferty.
He noted that the universal banks as obtained in the US and Europe came to their knees recently but were saved by the government in some instances, adding that the ugly development led to vast tax increases and exploding unemployment with lives of hundreds of millions of people ruined and banks and bankers becoming hate figures in their respective countries.To make retail banking succeed in Nigeria, the financial expert pointed out that Nigerian authorities and financial operators must see to the success of the regime as “sacred responsibility.”

Obstacles to retail banking in Nigeria
Lafferty said lack of retail banking understanding among senior bank management and board members is the main obstacle to the development of retail banking in Nigeria. Amongst other hindrances which include infrastructural costs, a skill deficit, the need for a better legal framework for mortgages and the need for a national ID scheme. More importantly, he also said that banks’ emphasis on crazy targets and short-term results were also major impediments to the evolution of retail banking in this country.   Other reasons he identified for the failure of the universal banking model were speculative deal making culture at the top as well as the domination of the boardrooms of the universal banks by corporate and wholesale bankers.

The way forward
He said retail banking can succeed in Nigeria, when regulatory authorities and financial operators see to the success of the regime as “sacred responsibility.” “Retail banking will succeed with ethical underpinning and retail banking separated from corporate banking as well as investment banking. Above all, the system should be all about knowing the customer,” he said.
He noted that retail banking stand to succeed in Nigeria when retail banks see their jobs as all about building relationships and the work of retail banking in banks taken as profession such as medicine, law and accountancy,” adding that “it also requires a special code of conduct to make it work.”Lafferty Group has scheduled a world-class regional retail banking and cards conference in Nigeria from May 4 to 5 this year.
Evelyn Hunter-Jordan, the general manager and head of Councils, Lafferty Group, said the conference will bring together Africa’s finance industry to share best practices, identify new business opportunities and develop strategies for future growth and profitability of operators in the industry as well as the growth of the economy.
In spite of the overwhelming indicators as to why  Nigerian banks should embrace retail banking, finanacial analysts are of the opinion that microfinance banks traditionally saddled with the responsibility of consumer banking shall continue to exist as the market is large enough to accommodate them.