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How Nigerian Banks Raked in Billions from E-Business in 2023

How technology is changing the financial services landscape in Nigeria

by Motoni Olodun

Nigeria’s banking sector has witnessed remarkable growth in its electronic business revenue in the first nine months of 2023, according to a report by Nairametrics, a leading financial news website. The report, based on the analysis of the financial statements of 11 listed banks, shows that the banks generated a total of N265.269 billion from their e-businesses, a 24.42% increase from the N213.204 billion recorded in the same period of 2022.

The report attributes the growth in e-business revenue to the increasing adoption of fintech solutions by the banks and their customers, especially in the areas of payment services, microfinancing, lending, and software solutions. The report also highlights the impact of the COVID-19 pandemic on the digital transformation of the banking sector, as more people resorted to online and mobile banking to access financial services amid lockdowns and social distancing measures.

The report ranks the banks according to their e-business income, with Access Holdings Plc and United Bank for Africa Plc (UBA) emerging as the top two earners, generating N70.350 billion and N61.161 billion respectively. They are followed by FBNH, Zenith Bank Plc, and GTCO Holdings, which earned N48.789 billion, N33.551 billion, and N30.906 billion respectively. The report also shows the profitability of the banks, with Zenith Bank Plc posting the highest profit before tax of N505 billion, followed by UBA with N502.1 billion, and GTCO Holdings with N433.2 billion.

E-business revenue includes income from electronic channels, card products, and related services. These channels include mobile applications, USSD channels, automated teller machines (ATMs), agency banking, internet banking, and point of sales (POS) payments.

The growth in e-business revenue reflects the rising popularity of mobile and online banking in Nigeria, as more people use these channels to access financial services. According to the Nigeria Inter-Bank Settlement System (NIBSS), the volume of electronic transactions in the country increased by 88% from 1.69 billion in 2022 to 3.18 billion in 2023.

Fintech is transforming the financial services landscape in Nigeria, making it more accessible, convenient, and affordable for individuals and businesses alike. Fintech companies are using technology to provide financial services that are more inclusive, efficient, and innovative.

One of the most significant impacts of fintech is the increase in financial inclusion. Fintech companies can reach people who were previously unbanked or underbanked by providing services that can be accessed through mobile phones. This has led to a significant increase in the number of people who have access to financial services in Nigeria.

According to the Central Bank of Nigeria (CBN), the financial inclusion rate in the country improved from 63.2% in 2018 to 76.9% in 2023, surpassing the target of 70% set by the National Financial Inclusion Strategy (NFIS).

Another impact of fintech is the growth in the volume and value of financial transactions. Fintech companies have made it easier and more convenient for people to make payments, transfer money, and invest their money. This has led to a significant increase in the volume and value of financial transactions in Nigeria.

According to the CBN, the total value of electronic payment transactions in the country rose by 113% from N203.35 trillion in 2022 to N433.01 trillion in 2023.

The entrance of telecoms into the financial services sector has also had a significant impact. Telecom companies have the infrastructure to reach people in rural areas, where traditional banks are often not present. This has made it possible for more people in rural areas to access financial services.

According to the Nigerian Communications Commission (NCC), the number of mobile money agents in the country increased by 127% from 418,454 in 2022 to 950,812 in 2023.

Fintech is also having an impact on the way that banks operate. Banks are increasingly using fintech solutions to improve their efficiency and reduce their costs. This has led to an increase in non-interest income for banks, as they can generate more revenue from commissions and fees.

According to Nairametrics, the eleven banks recorded a strong profit before tax of N2.339 trillion in the nine months of 2023, a 160% increase from the N899.925 billion recorded in the same period of 2022.

The growth in e-business revenue is a positive sign for the Nigerian banking sector. It shows that banks are adapting to the changing needs of customers and are well-positioned to benefit from the growth of the digital economy.

Fintech is expected to continue to drive innovation and inclusion in the financial services sector, creating more opportunities for economic development and social empowerment in Nigeria.

Source: Nairametrics


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