In the first quarter of 2023, Nigeria’s major commercial banks, United Bank of Africa (UBA) and Access Holdings, emerged as the top earners in e-business revenue.
The banking sector as a whole witnessed substantial growth, generating N96.483 billion in e-business revenue, marking a significant increase of 23.84% compared to the previous quarter.
According to a report from Nairametrics, UBA recorded revenues of N20.929 billion from its e-business activities, closely followed by Access Holdings with N20.664 billion
Uba Bank, Access Bank Nigeria, and Other banks
Zenith Bank Plc, FirstBank Nigeria Limited, and Guaranty Trust Bank Plc completed the top five, generating e-business revenues of N12.079 billion, N17.876 billion, and N11.425 billion, respectively.
This notable increase in total revenue highlights the significant impact of fintech in driving the banking sector’s performance, inclusivity, and commercial viability.
The recent shortage of currency caused by the naira redesign policy likely contributed to the surge in revenue, resulting in a boom in e-banking services.
During this period, Nigerians had limited options but to rely on fintech solutions and reliable channels to conduct their daily transactions, especially in cash-intensive activities.
This shift was a response to the cash crunch caused by the Central Bank of Nigeria’s Naira redesign policy.
It is not surprising that commercial banks that successfully integrated technology into their services benefited from the surge in online banking during this period.
However, despite the growth in e-banking services, the naira redesign policy revealed an urgent need for the banking industry to catch up with technology to effectively meet economic demands.
Nevertheless, the growth in e-business revenue indicates that banks are adapting to evolving customer needs and are well-positioned to benefit from the expansion of the digital economy.
E-business revenue encompasses income generated from electronic channels, card products, and related services, including mobile applications, USSD channels, automated teller machines (ATMs), agency banking, internet banking, and point-of-sale (POS) payments.
The Increasing Demand for Fintech in Nigeria
Fintech refers to platforms or companies that leverage technology to provide accessible, available, and affordable financial services to individuals, including those who were previously excluded due to environmental and economic factors.
These platforms can reach previously unbanked or underbanked individuals, offering services that can be accessed through mobile phones from the comfort of their homes, addressing the global goal of financial inclusion.
In 2019, Christine Lagarde, the Managing Director of the International Monetary Fund (IMF), warned about the disruptive potential of tech companies utilizing big data and AI in the financial landscape. Fast-forwarding to 2023, the financial sector in Nigeria and globally continues to experience a remarkable surge in fintech-driven services.
Statistics indicate that between 2018 and 2021, the number of fintech startups in Nigeria increased from 12,131 to 26,346. A fintech provider in Nigeria witnessed a surge from 8,000 to 50,000 agents between 2019 and 2021. These numbers reflect the continuous deployment of technology and innovation in the traditional banking system to enhance financial service delivery.
Recent research conducted by Technext revealed a staggering 160% growth in fintech app installations compared to the second quarter of 2020. Loan apps experienced the highest growth at 43.3%, followed by financial services at 35.6%, and investment apps at 20.3%.
The Urgency for Commercial Banks to Embrace Technology
One of the key factors contributing to the rise of fintech in Nigeria is the lack of trust in conventional banking institutions to provide inclusive and efficient services. The recent scarcity of the naira highlighted the need for more fintech platforms in Nigeria to offer financial services comparable to global standards. The sudden surge in digital banking overwhelmed many banks, resulting in unreliable and irregular service delivery.
To compensate for this shortcoming, individuals and business owners turned to fintech-enabled services to access financial services due to their proven efficiency and reliability. Platforms like Moniepoint and O-pay became household names, particularly among petty traders and informal business owners who make up Nigeria’s informal economy.
The current numbers indicate that commercial banks need to rapidly embrace technology and integrate it into their services. This will create a win-win situation for the industry, as banks can increase profitability while meeting customer demands through efficient service delivery and achieving financial inclusion for unbanked Nigerians.
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