So Diamond Bank is offering a product that they think will catch on. They are offering no COT on a current account. COT means Commissions on Transaction, and it is the amount that is charged for the privilege of keeping an account with the bank.

It is something from the stone age of banking but is still used in Nigeria by the banks to boost revenues and profits. It still exists in the states technically, but all the "free checking" competition has pretty much eliminated it.

Well COT in Nigeria starts at a maximum 0.5% 5 per mille as we call it, though you can get concessions if you have significant transaction volumes on your account (another example of the poor subsidizing the rich in financial services)

So Diamond Bank have a product targeted at the consumer market that purports to save you from all this COT wahala. All you have to do is maintain a minimum balance of N25,000 with them and pay N5,000 per month.

Now the N25k looks good, especially when a lot of the other retail "NO COT" products ask for a minimum balance of N100k. However things start to look a little pear shaped when you look at the N5k. For it to be worthwhile to pay N5k a month to not pay COT, you have to do transactions of N1M in your account every month, or N12M every year. Now how many people will have that volume of transactions a month?

To my mind the fact that the product is targeted at people who will not have that kind of volume to make it worthwhile makes it a scam. Now I will stress that the product is not illegal, after all consumer products sell us things we don't need all the time.

But it is pretty clear that the guys of Hustle will be impressed with this one.