• Thursday, March 28, 2024
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BusinessDay

Big banks deepen financial inclusion as e-transact earnings hit N78bn in H1

financial inclusion

The advent of technology is making huge impact in Nigerian financial industry as earnings from e-transactions of the five biggest banks in the country grew by 73.89 percent in one year.

The commercial banks have continued to introduce digital products into their operations, driven by the need to eradicate long queues in banking halls, make cash transactions easier, faster and resolve other issues associated with payments and financial transactions.

BusinessDay’s analysis of the annual financial reports of Nigeria’s tier-one banks revealed that the country’s largest banks grew their earnings from electronic transaction to a record high of N78.44 billion in the first half of 2019 from the N45.11 billion reported in the corresponding period of 2018.

Zenith Bank, First Bank and United Bank for Africa (UBA) topped the chart as they reported highest revenue from their e-transactions in H1. The lenders reported N27.08 billion, N21.83 billion and 16.86 billion in H1 respectively.

This is compared to the N10.08 billion reported by Zenith in H1 2018 and the N14.92 billion and N12.15 billion reported by both First bank and UBA in the review period.

“Nigeria has a large mobile market, the huge number provides an opportunity to use it in deploying easy-to-use technology that can improve access to financial services across Nigeria’s mobile financial service platform and could be the answer to bridging the gap in inclusion level,” Oghogho Osula, financial expert and former Managing Director/Chief Executive Officer of Coronation Trustees Limited said.

According to data by Nigerian Communications Commission (NCC), the total number of subscribers per each individual telecoms operator as at June 2019 stood at 173.75 million.

A further dive into the half-year financial reports of Nigeria’s biggest lender revealed that Guaranty Trust Bank (GTB) and Access Bank also made progress in their earnings from electronic transactions. GTB reported N7.14 billion in H1 2019, 67.21 percent increase when compared to the N4.27 billion it reported in 2018.

Access Bank followed in line with 49.86 percent surge in earnings from electronic business, from N3.69 billion in H1 2018 to N5.53 billion in H1 2019.

“With most banks rolling out products like USSD, financial service Apps and POS, transactions through the convenient mediums are beginning to return good earnings for the banks and with the amount of investments Fintech are attracting, it tells you that financial technology is the way to go,” a player in the financial industry who asked not to be identified said.

According to the CBN’s guidelines on bank charges, which took effect on May 1, 2017, withdrawals from other banks’ ATMs within the country, attracts N65 charge after the third withdrawal within the same month.

According to the guidelines, bills payment on electronic channels of the banks also attracts N50 for transactions below and above N10bn, while real-time gross settlement attracts N550 per transaction.

The apex bank stated that alerts on transactions should not be more than N4 per SMS, while bulk payments such as salaries and dividends attract a maximum of N50 per beneficiary, which is paid by the sender.

In January, 2012, the Central Bank directed banks to begin full implementation of electronic payments of suppliers, all form of taxes, salaries and pensions, by both private and public organizations with more than 50 employees/pensioners in the country.

The then Deputy Governor of CBN in charge of Operations, Tunde Lemo restated the apex bank’s commitment to embark on the implementation of the policy in order to explore its potential benefits to banking system and the economy.

“We want to eradicate dominance of cash and paper-based activities in the economy, manual operations and delays in clearing time of cheques, infrastructural bottlenecks, sharp practices and insider abuses, shortage of technical personnel and low confidence in the banker’s clearing system” he said.

In the same year, the apex through its collaboration with industry stakeholders launched the National Financial Inclusion Strategy (NFIS) in which it set a target to ensure it include 80 percent of Nigerians into the financial cycle.

Latest figures by EfInA put Nigeria’s financial inclusion rate at 63.2percent, meaning that as much 36.8 percent adults still lack access.

At a recent Financial Services Agents Forum for North-Central on, Ashley Immanuel, EFInA head of programs said their last survey showed over 36m adults in Nigeria were still completely financially excluded.

“They do not use bank accounts, Microfinance Banks, may be they save under their pillows, they borrow from family and friends. They do not use any form of financial system,” she stressed.

If the apex bank is to achieve its 20 percent exclusion rate by 2020, the lender would have to ensure it bridge the 16.8 perecnt inclusion gap in less than five months.

 

Endurance Okafor