Stories by Omodele Adigun
In what looks like a major boon to digital banks eyeing the Nigerian market, electronic banking in the country has soared above N46trillion in less than a year.
According to the data from the National Bureau of Statistics (NBS) on ‘Electronic Payment Channels in the Banking Sector for Q3 (third quarter) 2016’, the volume of payments across all the channels for the first, second and third quarters was 628,590,301 valued at about N46.091trillion.
The payment channels gauged were the Nigeria Inter-Bank Settlement System (NIBSS) Instant Payment (NIP), NIBSS Electronic Fund Transfer (NEFT), Cheque transactions, Point of Sale (PoS), Automated Teller Machine (ATM), Internet or Web and Mobile (Phone Money) Payments.
A breakdown shows that in third quarter alone, about 238.89 million deals worth N18.16 trillion passed through the seven platforms, while 202.88 million transactions worth over N14.704 trillion and more than 186.82 million of businesses worth N13.23 trillion were recorded in the second and first quarters respectively.
Top on the list was NIP which recorded more than N25.956 trillion through about 95.15 million transactions. It was followed by NEFT with N11.26 trillion done in 22.54 million transfers. As for paper payment, about N4.31trillion was cashed through 8.741 million cheques, to make that channel ranked third in the period.
The rest include: ATM, which boasted of over N3.451 trillion carried out through 418.29 million withdrawals and retraction or savings. Recall that from 2013 to 2015, about N1.13 trillion was done via over 124.79 million transactions.
Mobile payments recorded more than N526.58 billion through over 33.6million business deals. PoS came 6th as bank customers use the platform to do business above N498.42 billion through 41.37 million deals.
Last year alone, PoS transactions peaked at about N448.513billion, representing 44 per cent rise over the N312.072 billion of the previous year.
In all, transactions worth of about N1.193trillion were done through the 75,000 active PoS in the country since 2014 up to last August.
The platform that ranked the least was Internet or Web banking, with about N88.732billion done by customers in 8,913,148 deals.
Experts have applauded the trend as an indication that the culture of electronic banking is gradually taking roots in the country.
For instance, the Minister of Communications, Adebayo Shittu, noted recently that the growth of the electronic banking is very fast especially now that several transactions are done via ATM, PoS, Internet banking, Mobile Money, and NEFT. He added that today, account opening is now possible on Social Media platforms such as Facebook as a result of the emerging migration of financial services and transactions from banking halls of brick and mortar to the clouds.
Also, KPMG, in its Africa Banking Industry Retail Customer Satisfaction Survey, states that Nigerian banks have certainly put significant investment and effort into developing a better and easier online banking system. And Nigeria’s customers have certainly proven themselves to be internet- savvy.
It adds: “The country is estimated to have more than 148 million mobile telephone subscribers and at least 92 million of them access internet data services on their devices. And, with around one-third of Nigeria’s population now under 24 years old and a growing middle class population, all signs suggest that internet penetration and usage is set to grow significantly.
“In particular, social media channels are gaining significant adoption in Nigeria. Platforms such as Facebook, Instagram, Twitter, LinkedIn and Tumblr are widely used by Nigerians as a way to communicate with friends and the wider public.
“The benefits of shifting transactions to web-based platforms are clear. For customers, web-based platforms offer convenience, 24 / 7 access, and freedom of location.”
All these are considered a big boon to the promoters of online-only bank in the country. Already, a bank which promised to conduct its business only through telephone, mobile and internet banking, has commenced business in Lagos. The bank, SunTrust Nigeria Limited, which opened for business last August vowed to run branchless office, while providing cutting edge banking services to its customers around the country.
Its Chief Executive Officer, Muhammad Jibrin, said the vision of thebank is “to offer high quality retail and commercial banking services in a modern and innovative manner.
“We will use technology and a new way of thinking to provide banking services to many people in Nigeria for whom access to bank accounts has previously been impossible.
“We will offer telephone, mobile and internet banking underpinned by the traditional banking ethics of probity and integrity,” Jibrin said.
Also last September, the former Managing Director of Jumia, popularly regarded as Nigeria’s biggest online mall, Tunde Kehinde, said he was set to float the nation’s first online-only bank in the country.
The bank, Lidya, which is being branded as Nigeria’s first digital bank, will have no branches, but would use a lot of technology, algorithms and machine learning to industrialise the credit assessment process.
For Nigeria’s banks, the shift promises the opportunity to improve service delivery and achieve a lower cost-to-serve.
The former Jumia boss also runs Africa Courier Express, a logistics company, along with Ercin Eksin, the other founder of Lidya.
Kehinde and Eksin are majority shareholders, but they hope to bring in other shareholders and raise more than $1 million in the next few months from investors, primarily in the US.
It was expected to partner with other Nigerian banks to allow them use it as a platform to target small businesses.
The online bank is looking to operate at a lower cost and offer financial services at such low cost to its customers.
“Because of how the banks are set up, with bricks and mortar networks, they’re more inclined to service multinationals and large government institutions.Their cost structure isn’t favourable to servicing small businesses. Because we’re using technology and algorithms to assess the risk, it allows them to offer financial products to these customers at a low cost,” Kehinde said.
To succeed in today’s banking environment, bank executives need to understand their customers: their preferences, their channel usage, their needs and their satisfaction
Encouraging the shift to internet and mobile banking: A Nigerian perspective
Nigerians love the internet. The country is estimated to have more than 148 million mobile telephone subscribers and at least 92 million of them access internet data services on their devices. And, with around one-third of Nigeria’s population now under 24 years old and a growing middle class population, all signs suggest that internet penetration and usage is set to grow significantly.
Africa Banking Industry Customer Satisfaction Survey Ease of use is also a key challenge for Nigeria’s banks and this influences the willingness of customers to adopt
web-based channels. As one – rather typical – Nigerian banking respondent told us, “My friends tell me it’s not easy to use so I’ve never really bothered. Besides, there’s
too much hassle to sign up.” Our data reinforces this view: when it came to the use of the online channel, respondents reported the lowest levels of satisfaction for the ease of navigation and the visual design. With recent media attention on cyber security risks such as cloning and identity theft on the rise, many Nigerian customers are also deeply concerned about the security of their transactions. As another survey respondent told
us, “I do not trust the system, I’d rather go to the bank for the money to be transferred by the bank’s staff than do it myself as I would get the blame should anything
go wrong.” So while many banks have introduced more robust security measures recently, they will need to continue to focus on assuring customers of the safety of their online channels. How can Nigerian banks start to improve internet banking penetration? We believe focus must be placed on three key areas: 1. Improving the customer perience
• Reinvigorate and refresh the bank’s web assets to prioritize ease of use, navigation and visual design; aim to simplify the number of steps to complete a transaction or add more robust capabilities that respond to their customers’ technological
sophistication.• Introduce improved functionality targeted to specific customer segments such as corporate customers or SMEs who are particularly focused on security and
the need for customized financial reporting and access to reliable, real-time financial data.
• Harness employees as channel ambassadors and customer experience experts; banks should be encouraging their own employees to use online banking and suggest opportunities for improvement.
Fitch affirms Wema Bank’s stable outlook at BBB
Fitch Ratings has affirmed the Long-term National Rating of Wema Bank at BBB-. This is reflective of the Bank’s stable outlook and continued viability, in spite of the challenging macro-economic environment.
In Fitch’s opinion, the banking industry will remain challenging considering low oil prices, continued disruptions in oil production and constraints regarding the Forex liquidity. As such, the industry could witness a rise in non-performing loan (NPL) ratios, though the rating agency expects banks to remain profitable in 2016. The rating agency affirmed Wema Bank’s Viability Rating (VR), showing a stable outlook.
The Long-term Issuer Default Ratings (IDR) of Wema Bank also remains Stable at B-, as the rating is driven by Wema’s Viability Ratings (VR). Fitch does not expect any material change in the bank’s intrinsic creditworthiness.
Wema Bank’s strength, which underpins its long and short-term ratings, include the bank’s strong risk management culture, low NPL exposure and good liquidity levels. The bank’s affirmed rating further reinforces its resolve to remain a smarter and efficient bank, driven by innovation and technology.
Segun Oloketuyi, the Managing Director of Wema Bank Plc, stated that the rating is an affirmation of the Bank’s continued transformation, risk culture and positioning, as one of the major players within Nigeriaís Retail Banking Landscape.
Mastercard, YTF to empower women entrepreneurs
In celebration of Women’s Entrepreneurship Day, Mastercard has confirmed its ongoing support of the long standing partnership with Youth for Technology Foundation (YTF) to continue efforts to improve financial literacy, technology and skills-enhancement training for women in Nigeria.
Women’s Entrepreneurship Day is part of the annual Global Entrepreneurship Week celebrated between November 14 and 20. The day serves as a reminder that women play a vital role in economic growth. Financial literacy training and mentorship is crucial to support, develop and grow these women-owned businesses.
“Our focus is on providing training that leverages existing accessible technology and imparting how best to market products and services,” said Njideka Harry, President and CEO of YTF. “We are able to help these women entrepreneurs leapfrog recessionary challenges and achieve the potential for exponential growth within their chosen fields.”
To date, the partnership has impacted over 11,000 Nigerian women entrepreneurs across 14 states by improving the financial literacy of these women, often the breadwinners, and equipping them with essential business management and capacity building skills through the support of mobile technology. The partnership also gives them access to a network of empowered women.
An example of the impact made through the collaboration is Eucharia*, owner of Tokaf Investments. This 36 year old, mother of four, has grown her business by 60 percent by simply applying the principals learnt at the YTF sessions.
Today she uses her mobile device to connect with customers, sharing product information and specials, and updates them on current trends in the building industry. She was also able to reassess and refocus her approach, moving out of the expensive warehouse space she previously rented.
With micro, small and medium enterprises comprising 96 percent of Nigerian businesses and with the current economic situation in the country, it has become more important than ever to support small business owners.
Putting a face to these numbers keeps the team focused on their goal of helping as many women as possible through the partnership. Nneka*, the owner of Ebony Ventures, a wholesale cooking and kitchen supply business, was shown how ecommerce could solve many of her challenges. This now confident business woman is keen to grow her business beyond Nigeria and has implemented a new pricing model to ensure the continued growth of her enterprise. As part of the training, Nneka is learning how to take advantage of online market places like Konga and Jumia to market and sell her products to a global market.
Both Nneka and Eucharia are success stories, and there are many more in Nigeria. It reinforces the importance of the training which is ensuring the sustainability of the female entrepreneurship ecosystem, a priority for both Mastercard and YTF. Moving into 2017, the partnership aims to include further training for 150 apprentices.
The apprentices are the talented young women that existing women business owners are employing, many of whom have been part of the YTF program. These young ladies will be trained and groomed to become the next generation of business owners, starting a ripple effect that will impact generations of women in Nigeria.
ìAt Mastercard, we believe economically empowered women are major catalysts for development,î explains Omokehinde Adebanjo, Vice-President and Area Business Head, West Africa, Mastercard. Through our partnership with YTF, we are providing women in Nigeria with the tools for economic empowerment to break down poverty cycles and create opportunities for long-term wealth. We are seeing that by harnessing the power of technology, we are transforming the lives of women entrepreneurs in the country.
Sterling Bank adopts core banking solution in branches
Temenos software specialist for banking and finance has announced that Sterling Bank Plc has successfully gone live with Temenos UniversalSuite, just as it simultaneously rolls out its Core Banking Solution across 185 branches.
The Geneva-based software specialist, in a statement at the weekend, explained that the bank’s move to replace its existing legacy systems with Temenos core banking solution would support ambitious growth plans, including reaching customers in new geographical locations and improve its ability to bring new products to market.
The bank went live with an ambitious big bang approach across all its 185 branches simultaneously, allowing the whole business to benefit from the new technology in the quickest time frame.
Jean Paul Mergeai, Regional Director at Temenos, said: “By selecting Temenos core-banking solution to underpin its IT transformation, Sterling Bank is leveraging the technology that should give it a competitive edge in a fast moving market, increase operational efficiency, reduce risks and improve customer service.”
Yemi Adeola, the Managing Director of Sterling Bank said: “Technology has become the backbone of the global banking system today and as an institution, we are committed to continuously making the necessary investments to ensure we deliver the one-customer experience to all our customers. Our choice of Temenos is founded on its impressive track record and reliable service delivery; a trait synonymous with the core values we hold dear”.
Temenos Group AG (SIX: TEMN), headquartered in Geneva, is a market leading software provider, partnering with banks and other financial institutions to transform their businesses and stay ahead of a changing marketplace. Over 2,000 firms across the globe, including 38 of the top 50 banks, rely on Temenos to process the daily transactions of more than 500 million banking customers. Temenos customers are proven to be more profitable than their peers: over a seven year period, they enjoyed on average a 31% higher return on assets, a 36% higher return on equity and an 8.6 percentage point lower cost/income ratio than banks running legacy applications.
Sterling Bank Plc, ìthe one-customer bankî, is a full-service Nigerian commercial bank with an asset base above N890 billion, over 187 business offices and more than 800 ATMs across Nigeria. In over 55 years of service, Sterling Bank has evolved from the nationís pre-eminent investment banking institution to a fully-fledged commercial bank. Furthermore, with a strong national presence, Sterling Bank is one of the top 30 most capitalized institutions on the Nigerian Stock Exchange. The bank also remains one of Nigeriaís fastest growing banks and is recognized as a dynamic financial services organization.