The advent of technology is making huge positive impact in the financial sector as the earnings from e-transactions of the five systemic important banks grew by almost 200 percent in five years, from N33.42 billion in 2014 to N100 billion in 2018.
Nigerian banks have continued to introduce digital products into the financial sector and their operations, driven by the need to eradicate long queues in banking halls, make cash transactions easier and faster and resolve other issues associated with payments and financial transactions. This is believed to have contributed to the growth reported in banks’ revenue from e-transactions.
BusinessDay’s analysis of the five-year annual financial reports of Nigeria’s tier-one banks revealed that the country’s largest banks grew their earnings from electronic transaction by 199.22 percent or N66.58 billion within the period.
According to the data from the financials of Nigeria’s biggest banks as analysed by BusinessDay, United Bank for Africa, despite having the second-highest revenue (N27.92 billion) from e-transactions in 2018, earned the most revenue in the five-year period with a total of N108.26 billion.
The commercial bank recorded N27.92 billion from e-transactions in 2018, while in the year before it reported N20.92 billion. It attracted N30.47 billion, N17.19 billion and N11.76 billion as revenue from its e-businesses in 2016, 2015 and 2014, respectively.
This was closely followed by First Bank, which reported a total of N107.7 billion in comparable period. The commercial bank earned the highest income on its electronic products in 2018 (N34.03 billion), while it recorded N24.99 billion, N21.84 billion, N15.37 billion and N11.47 billion in 2017, 2016, 2015 and 2014, respectively.
The result by the tier-one lender largely reflects FBN’s strong digital banking footprint with 9.4 million digital banking customers as at the end of 2018, data from the bank’s financials show.
Bankers and financial analysts point to the emergence of the FinTechs and the e-banking policies of the Central Bank of Nigeria (CBN) as the reasons for this increase.
Jude Monye, executive director, Heritage Bank, attributed the growth of e-banking transactions to the success of the cashless economy, the CBN’s focus on e-banking across board, global transition to e-business and the advent of the FinTechs.
Zenith Bank, Nigeria’s largest lender by asset, ranked the third on the list of the country’s tier-one banks with the highest revenue from e-transactions. The bank reported accumulated revenue from electronic transactions to the tune of N60.23 billion in the five-year period. It reported N20.42 billion in 2018, while for 2017, 2016, 2015 and 2014 it recorded N14.15 billion, N12.28 billion, N10.69 billion and N2.69 billion, respectively.
Earnings from e-transactions for both GTB and Access Bank also grew in the review period. GTB reported a total of N51.04 billion for the five-year review period, while Access Bank attracted N41.74 billion from the same channel.
“First of all, the cashless economy is key. Every successive government is pursuing cashless economy. The second one is the focus of the CBN. The CBN is highly focused on pursuing e-banking, bringing the right policies, environment, incentives, to ensure that we transit to pure e-business environment,” Monye said.
The CBN introduced the cashless policy in December 2011 and it was kick-started in Lagos in January 2012.
“There is e-business globally. E-business provides convenience, ease, it’s fast and everything. I will also add the financial inclusion drive of the CBN, which has ensured that many who did not put their money in the bank before now put their money in the bank. These people use the card and use the mobile platform. So, it’s all these that contribute to the growth of e-banking,” Monye said.
Rafiq Raji, chief economist at Macroafricaintel, said “a proliferation of point-of-sale terminals is probably one reason” the commercial banks reported growth in revenue from e-transactions.
Speaking on the rate at which tier-one banks are growing their revenue from e-transactions, a Lagos-based analyst said it is only normal that whenever there is general improvement in economic activities, tier-one banks will be the first beneficiaries considering they are the dominant players in the market.
Checks by BusinessDay revealed that tier-one banks have the larger share of customers in the financial industry, which was why they reported the most revenue from e-transactions.
According to data from the financials of Nigeria’s tier-two lenders, they also reported growth in their e-transactions despite having less customer base than the tier-one banks.
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