Increased investment in technology and the introduction of new online payment channels have earned Nigerian banks N133.92bn. IFE OGUFUWA gives a breakdown of their earnings
The adoption of electronic channels for financial transactions earned 12 Deposit Money Banks about N133.92bn revenue in the first nine months of 2020, findings have revealed.
With many bank customers striving to maintain social distancing by avoiding the banking hall and leveraging the more convenient digital platforms for various financial transactions, earnings of the financial institutions have continued to expand.
Also, financial technology companies with products that facilitate payments on their platform in partnership with DMB have contributed significantly to the earnings of these banks.
Analyses of unaudited financial reports of 12 banks for the nine month period ended September 30, 2020, showed that their collective revenues from electronic transactions grew by 11 per cent year-on-year from the N120.36bn earned by the financial institutions in 2019.
The income on electronic business of these banks came from Automated Teller Machine transactions, USSD, online transfer, electronic bills payments, Remita, Point of Sale payments and agency banking, among others.
Some of the banks assessed are Access Bank Plc, First Bank of Nigeria Plc, First City Monument Bank Plc, Fidelity Bank Plc, Guaranty Trust Bank Plc, United Bank for Africa Plc and Sterling Bank Plc.
Others are Jaiz Bank Plc, Union Bank of Nigeria Plc, and Wema Bank Plc, Unity Bank Plc and Stanbic IBTC Plc.
Access Bank’s income from electronic payments more than doubled in 2019 as it grew its electronic business by 105 per cent from N18.96bn in the nine months period in 2019 to N38.80bn in the corresponding period in 2020.
FBN’s electronic business income in the nine month periods ended September 2020 was N34.59bn, a marginal increase of 0.5 per cent over the N34.42bn revenue in the corresponding period in 2019.
Fees and commissions on digital payments earned by FCMB Plc in the first nine months of 2020 amounted to N6.62bn from N7.98bn the bank earned in the same period in 2019, recording 17 per cent year-on-year contraction.
Fidelity Bank Plc recorded e-payments loss of 34 per cent in the nine month period under review as it reported N1.74bn as earnings in 2020 as against N2.63bn in 2019.
With N8.21bn e-payments revenue from January to September 2020, GTB Plc reported a 26 per cent reduction in its electronic banking income from N11.04bn earned in the corresponding period in 2019.
Jaiz Bank recorded a contraction of 24 per cent on its electronic payment earnings as it reported N406.65m income from January to September 2019 from N307.55m in the same period in 2020.
Stanbic IBTC Plc’s earnings from its electronic products also slumped in the nine month period under review, recording 15 per cent reduction in income from N2.49bn earned in 2019 to N2.12bn in 2020.
For Sterling Bank Plc, its electronic products earned it N4.31bn in the first nine months of 2020, representing 16 per cent drop in revenue from N5.11bn the bank generated in the corresponding period in 2019.
Union Bank Plc generated N5.34bn from electronic payments charges in the nine months period under review in 2020, representing a five per cent decline as against N5.6bn earned by the bank in the same period in 2019.
UBA Plc’s electronic business income grew by four per cent, as it reported N26.71bn as its e-payment earnings from January to September 2019, from N27.87bn in the same period in 2020.
Unity Bank Plc recorded e-payment loss of 11 per cent in the nine months period under review as it reported N1.74bn as earnings in 2020 from N2.63bn in 2019.
From Wema Bank Plc’s financial report, its electronic payment income declined by 28 per cent as the bank reported N2.02bn as of September 2020 as from N2.79bn in the same period in 2019.
A latest study by Agusto & Co found that mobile banking applications remained the most popular digital banking platform, backed by the rising number of mobile phone users.
The research, which examined customers’ preferences towards digital banking platforms hosted by 10 selected banks in Nigeria, revealed that Internet banking and USSD banking ranked second and third among the most preferred digital banking platforms among Nigerians.
This was as WhatsApp, chatbots, and telephone banking ranked low among banking platforms used by Nigerians, the Consumer Digital Banking Satisfaction Index report stated.
Agusto & Co Consumer report stated, “Mobile banking applications remain the most popular digital banking platform.
“The increasing use of mobile banking has also been backed by the growing base of mobile phone users, which has grown by a five-year compound annual growth rate of six per cent to 184.4 million as the end of 2019.”
Digital payments on PoS terminals across the country had also grown as agent networks had increased by 313 per cent from over 85,000 in December 2018 to about 345,000 as of June 2020, the Chief Executive Officer, Shared Agent Network Expansion Facilities, Ronke Kuye, said in an article published in August.
Kuye said these agents operated in all the 774 local government areas and had processed a total of 76 million transactions valued at N1.3tn between January and June 2020.
A revised guide to bank charges issued by the Central Bank of Nigeria took effect in January this year.
The apex bank reviewed downward electronic transfer, ATM charges as well as card maintenance fees.
The CBN said the new charges aimed to reduce the costs of banking services to customers and encouraged them to embrace electronic channels.
It directed Nigerian banks and other institutions facilitating payments to implement N10 for electronic transfers below N5,000, and N25 for electronic transfer between N5,000 and N50,000.
Previously, bank customers paid N50 charge for electronic transfers below N500,000.
“Only electronic transfer above N50,000 will attract N50 charge,” the CBN said.
The guideline, which had since been implemented by the financial institutions, also slashed charges for cash withdrawal via other bank’s ATM to a maximum of N35 after the third withdrawal within the same month from N65 after the third withdrawal within the same month.