Nigerian banks are not left behind in raking revenues from the provision of electronic banking services just like the financial technology companies. BusinessDay analysis shows tier-one banks recorded a 74 percent growth in their electronic banking (e-banking) revenues in the first quarter of 2022 compared to the same period last year.
The banks, which include First Bank Holdings (FBNH), United Bank for Africa (UBA), Guaranty Trust Holding Company (GTCo), Access Holdings and Zenith Bank, have continued to show resilience these past years.
This is despite the rapid growth in fintech companies in Africa’s largest economy which have increased from about 50 in 2016 to over 300 in 2022.
Zenith Bank recorded a 44.7 percent increase in its electronic banking income to N24.6 billion in H1’22 from N17.0 billion in H1’21.
Access Bank saw a 30 percent jump in electronic banking income to N39 billion in the first half of this year from N30billion in the same period of 2021.
UBA recorded N36.3 billion in the first half of this year, a 22.6 percent increase from N29.6 billion in the same period of 2021.
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GTCo’s electronic banking income rose to N11.0 billion, up 4.7 percent from N10.5 billion in the first half of 2021.
The exemption is First Bank which recorded a drop of 11.4 percent decline to N25.5 billion in the first half of this year from N28.8 billion in the first half of last year.
Although the steady increase in e-banking revenue is beneficial for banks, customers embrace any innovation that makes financial transactions simple and convenient. Many customers have continued to complain about the charges associated with their transactions, which may lead them to seek cheaper options.
It is important to note that the high charges would limit the progress of financial inclusion as customers will avoid operating a bank account. It has been established by several surveys that customers are very sensitive to charges, Ayodeji Ebo, an investment professional, notes.
In the short to medium term, low transaction fees will be a major selling factor for banks, as customers will migrate to banks with the lowest charges.
Fitch Ratings, one of the three leading global rating agencies, has said in its mid-year outlook for Nigeria that the country’s huge population presents opportunities to both commercial banks and fintech companies to grow.
The global rating body gave this assurance in response to the concerns expressed by many industry stakeholders that the licensing of fintech companies to provide digital banking services in the country poses existential threats to Nigerian commercial banks.
Earnings from electronic banking include fees charged to customers for the use of digital channels, such as debit cards, mobile applications, USSD channels, POS, and other related online banking services.
These banks are benefitting massively from the wave of mobile phone adoption providing easy-to-use banking apps that are secure and operate seemingly like social media apps. Thereby boosting the efficiency of operations and enhancing customer satisfaction by ensuring transactions are carried out expeditiously.
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