Many Nigerians now hesitate to recall the last time they visited a bank branch to carry out a transaction. A few years ago bank customers would have made at least 2-3 visits to a bank’s branch before the day ends.
One of the notable achievements of financial technology (Fintech) is the speed of adapting to the new location of the 21st-century customer. The consequence of a social media boom is that people spend less time offline and more time online.
The growth of mobile phones has also contributed significantly to this migration from physical places to virtual platforms.
The National Bureau of Statistics (NBS) in March 2019, said Nigeria’s active mobile subscribers hit over 172 million in the fourth quarter of 2018 from more than 162 million the previous quarter. The NBS also revealed that a total of 106,420,858 and 112,065,740 were active on the internet in the fourth and third quarter as against 103,514,997 in second quarter of 2018.
For Fintech businesses and players, the numbers represent immense opportunities for growth. A major staple of fintech is the development of new financial technology products and services that are not limited by physical spaces. Fintech companies utilise technology as widely available as payment applications to more complex software applications such as artificial intelligence and big data.
Unlike traditional financial institutions, fintech businesses are nimble, flexible and aim at providing the most convenient service to customers. These services have so revolutionised the way people perceive banking that even banks are adapting and are beginning to compete for the front end of fintech in Nigeria. As banks embrace fintech, the physical branches that used to host a lot of people are thinning out.
A recent study by Expert Market forecast the complete disappearance of all ATMs by 2037, while bank branches while become extinct by 2041.
“We are a digital bank, which means we don’t have physical branches (because you won’t need them),” ALAT, the fintech arm of the decades old bank Wema Bank Plc, said in 2018 at a fintech function. “You’ll be able to do everything (sign up, request and activate a debit card, pay and save), on your phone.”
ALAT’s sentiments on physical branches have also been echoed by GTBank’s CEO Segun Agbaje. At the Social Media Week in Lagos in 2017, he noted that the bank is already planning for a future where 90 per cent of customers’ needs will be done through mobile phones. He also reiterated the resolve at the Social Media Week in 2019.
Nearly all the Nigerian banks now have financial digital strategy and are leveraging new social platforms to bring services closer to customers. Safe to say each is making plans for a future where online controls the largest share of their revenue activities.
What does the future hold for physical branches then?
“By 2020, we expect to have physical branches handling no transactions but just advisory services to our customers,” James Mwangi, CEO of Equity Bank said at a conference in Kenya where it also launched its fintech subsidiary, Finserve Africa Limited in August.
While physical bank branches will continue to experience less and less customers, it might take a little longer time – if at all – for them to become a relic for the museum. While the threat of fintech is real, what may never change is the customers need for physical contact.
Financial advisory is a field that is getting more attention from financial institutions. Earlier this year, to the surprise of many analysts, JPMorgan Chase announced plans to open 400 new bank branches. The branches which will be rolling out in October, is aimed at offering advisory services to small businesses. According to some experts entrepreneurs place more value on in-person advisory relationships they get when they visit bank representatives in person.
