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Major traditional banks’ such as UBA, GTCO, Zenith have succeeded in reaching customers digitally, through mobile, internet banking channels, despite intense competition from savvy tech companies that are popular among the younger generation.
The latest slides from the second quarter earnings presentation of some lenders shows an upward trajectory in internet and mobile banking trends, the largest items on the electronic product transactions.
The combined total transaction value for Internet and Mobile banking of Guaranty Trust Holdings Company Plc, United Bank for Africa (UBA), and Zenith Bank Plc stood at N94.13 trillion as at June 2023, which is 21.33 percent higher than 2022’s N77.58 trillion, according to data gathered by MoneyCentral.
Additionally, the cumulative total number of transactions on Internet and Mobile Banking by these three lenders hit 773.03 million in June 2023, which represents 25.58 percent increase from 2022’s 614.08 million.
There has been an increased adoption of electronic platforms which help magnify the value of electronic transactions as customers sort alternative to cash following the cash crunch from Naira redesign policy.
The embattled former central bank governor Godwin Emefiele had been steadfast in his cashless policy that caused chaos and paralyzed economic activities because the deadline in currency redesign was too short and abrupt.
In the last four years, digital banking income has been strengthening lenders’ revenue and profit, and that is on top of the easy money from higher interest rates and currency devaluation.
It is interesting to note that Nigerian banks have been spending a lot of money ensuring they can maintain the digital baking trend. Lenders have been in the forefront of deepening financial inclusion as customers are able to use their mobile application to carry out transactions wherever with convenience.
“We at Zenith are at the forefront of encouraging this upcoming digital economy. Since 2019 we have started having the annual tech fair, and what we do is we provide opportunities for upcoming tech entrepreneurs to showcase their products,” said Zenith Bank.
“We also organise a hackathon, where at the end we give cash prizes and we also put the finalists into an incubation programme to commercialise their ideas.So tech is something that we are monitoring closely, and we expect to be the main driver and advocate for that.”
Net Interest Income in the Digital Banks market is projected to reach $1,114.00m in 2023. Net Interest Income is expected to show an annual growth rate (CAGR 2023-2028) of 11.64 percent, resulting in a market volume of $1,932.00m by 2028, according to Stastista.
In short, the Nigeria digital banking industry is the largest on the continent as the country continues to take advantage of a young population that craves for consumption.
A separate report by PriceWaterhouseCoopers, or PWC, indicated that fintech investments in the country were valued at over USD$200 million from 2011 to 2018. A separate report from McKinsey showed USD$460 million worth of investments in the sector in 2019.
The value of the United Bank for Africa (UBA) mobile banking transactions increased by 38.71 percent to N12.39 trillion in June 2023 from N8.86 trillion as at June 2022. Mobile banking volumes surged 139.15 percent to 438.90 million in the period under review from 183.50 million the previous year.
For the first six months through June 2023, the value of GTCO’s digital banking transactions increased by 11 percent to N20.22 trillion from N18.22 trillion the previous year.
A breakdown of the figure shows the value of mobile and internet banking was up 14 percent to N17.4 trillion in June 2023 from N15.20 trillion as at June 2022. Value of internet banking rose by 3 percent to N1.39 trillion in the period under review from N1.34 trillion the previous year, while the value of USSD transactions fell by 15% to N1.43 trillion.
However, the Governor of the Central Bank of Nigeria, CBN, Olayemi Cardoso has raised concern about adequate “CBN surveillance frameworks being updated proactively to track the expanding use of electronic payment systems by Fintech and Telcos? Among others.”