Banks reap big from enhanced digital capacity



There are strong indications that tremendously improved investments in the electronic channels of the deposit money banks (DMBs), have started yielding results, contributing significantly to the strength of the balance sheet of the lenders.

Analysis of the annual reports of ten financial institutions, showed that in 2023, digital banking channels brought in roughly N438bn, 37.54 percent higher than N318.64bn the banking groups raked in through the same channels the previous year.

According to another report, Nigerian tier-1 banks earned N125 billion from electronic banking charges in the first three months of 2024, representing a 50.9 percent increase from the N82.8 billion earned in the corresponding period of 2023.

Last year, the Association of Corporate Affairs Managers of Banks (ACAMB), disclosed in a statement that Nigerian banks had invested in excess of N100billion in setting up and maintaining cutting-edge electronic channels over the past few years as part of commitment to seamless customer experience and real-time digital financial transactions.

The association had said, “From internet banking to mobile apps, Automated Teller Machines (ATMs), Point of Sales (PoS) merchants, mobile wallets, Unstructured Supplementary Service Data (USSD) codes, agents and digital franchises among others; not less than 80 percent of Nigerians now enjoy one form of digital or cashless transaction or another, powered by investments by Nigerian Banks”.

ACAMB, in the statement signed by its president, Rasheed Bolarinwa, noted that these commitments by deposit money banks had seen Nigeria rising steadily and recognised as having arguably Africa’s most advanced digital financial services industry and one of the world’s top 10 real-time payment markets.

“It is a national pride and a proof of Nigerian banks’ commitment to customer service that Nigeria is regarded as having Africa’s most digitized banking industry. Nigerian banks remain committed to continuing investments in seamless and secured digital banking that excite customers to voluntarily use and rely on the various digital and alternate payment systems available,” ACAMB noted.

E-business income includes revenue from electronic channels, card products, and related services. These channels include mobile applications, USSD channels, automated teller machines, agency banking, internet banking, point of sales payments, as well as credit and debit card transactions.
Some of the banks’ annual reports analysed by the research team of a major daily and tracked by our correspondent were FBN Holdings, Access Holdings, Guaranty Trust Holding Company, United Bank for Africa (UBA), Zenith Bank, Wema Bank, Fidelity Bank, FCMB Group, Stanbic IBTC Holdings and Sterling Financial Holdings Company.
Leading other banks in terms of revenue from electronic banking was UBA, which raked in N125.58bn compared to N78.94bn in 2022. Conversely, the banking group’s IT support and related expenses jumped by 148 percent to N23.19bn from N9.32bn in the preceding year.

Access Holdings recorded N101.62bn income from its electronic business, including transactions on electronic channels, card products and related services. That was about 70.34 percent higher than the 2022 electronic business income. The group’s IT and e-business expenses also rose during the period under review to N78.05bn from N44.63bn in 2022.

In its recently released audited statements, FBN Holdings reported N66.34bn as earnings from its electronic business higher than N55.09bn in the previous year.

In a statement accompanying the annual report, the bank said that electronic banking fees were a major driver of the growth of its fees and commission income.

“The underlying drivers of fees and commission were led by electronic banking fees (20.4 percent) to N66.3bn billion, Letters of credit commission and fees (278.4 percent) to N60.6bn, Account maintenance fees (12.3 percent) to N22.3bn and funds transfer and intermediation fees (204.9 percent) to N20.6bn”, the lender said.

Digital transaction

“Customer acquisition drive has also been enhanced through a growing adoption across digital platforms and greater penetration of the unbanked segments through the agency banking network, further boosting financial inclusion drive.”

Also, Zenith Bank recorded N51.82bn as earnings from electronic banking fees in 2023, 13.29 pe cent higher than N45.74bn in the previous year. The bank’s spending on information and technology during this time also rose by 8.48 percent to N33.59bn from N30.97bn in 2022.

In the case of GTCO, the income from electronic business went up to N40.83bn from N37.74bn in the prior year, and its communications, administrative and technological-related expenses increased to N50.24bn from N42.39bn.

Also, FCMB in 2023 recorded N17.69bn as revenue from electronic fees and commission, higher than N13.99bn in the previous year. The bank’s spending on IT almost doubled to N16.57bn from N9.99bn.

In the same vein, the earnings of Fidelity Bank from e-business rose by about 20.30 percent to N14.03bn from N11.66bn in 2022. The bank also increased its spending on IT significantly in 2023 as it surged by 274.73 percent to N16.57bn from N4.42bn in the previous year. Sterling HoldCo also reported N8.588bn from e-business commissions and fees last year, higher than N7.16bn in 2022.


Wema Bank, with its fully digital bank, ALAT, saw its fees from electronic products rise to N7.35bn from N6.13bn. Its spending on technology and alternative channels, however, declined by 1.84 percent to N1.42bn
Gloria Fadipe, a research analyst at CSL Stockbrokers, said the rise in electronic banking income was because of Nigerians’ growing reliance on electronic channels.
Similarly, the Managing Director/Chief Economist at ADSR, Dr Afolabi Olowookere, said, “After COVID-19, the financial sector and ICT have been growing because people do a lot of transactions online.”

According to a new report from Accenture (NYSE: ACN), by rethinking their business models and embracing the innovative strategies of digital-only banking and financial services new entrants, traditional banks could boost revenues by nearly 4% annually, resulting in more than half a trillion dollars in additional revenues by 2025.

The report, “The Future of Banking: It’s time for a change of perspective,” analyzes the business models of nearly 100 leading traditional banks and over 200 digital-only players in 11 countries across North America, Europe, Asia-Pacific, and Latin America and the role they play in the banking value chain.




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