Seven Nigerian banks generated a cumulative N132.45 billion from e-business operations in the first half of 2024, reflecting a significant uptick in digital banking adoption across the country.
These banks include FBN Holdings, Zenith, GTCO Holdings Stanbic IBTC, Wema, FCMB, and Sterling Financial Holding.
This amount, as revealed in their respective half-year 2024 financial results, represents a substantial increase for several top financial institutions, as they continue to leverage technology to offer seamless services to their customers.
E-business revenue for the banks includes income from transactions carried out by their customers on digital platforms such as Automated Teller Machines (ATMs), mobile banking and payments, Internet banking, Point of sale (POS) terminals, and Electronic funds transfer (EFT).
What each of the banks earned
Specifically, tier-1 bank, Zenith emerged as the highest earner from e-business activities, generating N41.2 billion in half-year 2024, a remarkable 85.6% increase from the N22.2 billion it earned in H1 2023.
FBN Holdings came behind Zenith in terms of e-business revenue, recording N35.1 billion in the first six months of 2024. This marks a modest increase of 3.2% from N34 billion in H1 2023, indicating steady growth in its digital service offerings.
- GTCO Holdings also saw significant growth in its e-business operations, earning N32.5 billion in H1 2024, up by 53.3% from N21.2 billion in the same period last year. The bank continues to focus on enhancing its digital footprint, which has contributed to its increased revenue.
- FCMB posted N10.8 billion in e-business revenue for H1 2024, reflecting a 45.9% increase from N7.4 billion in H1 2023.
- Wema Bank, known for its innovative ALAT platform, recorded N6.1 billion in e-business revenue for the first half of 2024. This is a significant 96.8% jump from N3.1 billion in H1 2023, showcasing the bank’s growing dominance in the digital banking space.
- Sterling Financial Holdings saw a marginal increase in its e-business revenue, generating N4.6 billion in H1 2024 compared to N4.4 billion in the corresponding period last year. This represents a 4.5% growth, reflecting the bank’s steady performance in the digital banking segment.
- Stanbic IBTC remained flat with N2.1 billion in e-business revenue for both H1 2024 and H1 2023, indicating no percentage change.
What this means
While two other tier-1 banks, Access Holdings, and United Bank for Africa, who are known to be heavy in terms of e-business, are yet to release their Q2 results, the earnings released by other banks so far show the growing embrace of digital banking channels as customers increasingly shift away from traditional banking methods.
- A look at the operating expenses of the banks for the period under review shows that they also increased their spending in ramping up their IT infrastructure in the six months.
- GTCO, for instance, increased its IT spending by 115% from N17 billion in half-year 2023 to N36.6 billion this year.
- Zenith Bank also upped its IT spending from N8.6 billion in the first half of 2023 to N23 billion in half-year 2024, representing a 167% increase.
- Stanbic IBTC also spent N15.8 billion on IT in the period up from N7.5 billion spent in half-year 2023, while FCMB increased its IT spending from N6.2 billion to N8.3 billion in the first six months of 2024.
However, according to the Chief Executive Officer of Clane, a mobile payment company, Mr. Dipo Alabede, the increasing adoption of digital platforms means that “the banks should also expect a rise in cyber threats, including phishing attacks, ransomware, and data breaches, thus investing in cybersecurity is imperative.”
In addition to that, he said the banks would also need to shore up their investments in IT infrastructure if they want to remain ahead of the curve in the highly competitive digital payment space.
“While the banks are already seeing growth in digital transactions and revenue, the financial industry is rapidly evolving with the advent of fintech companies and new technologies like blockchain and artificial intelligence. They have to increase their investment in IT infrastructure to adapt to these changes, integrate new technologies, and stay competitive,” he said.
Also speaking with Nairametrics, the Chief Technology Officer at Onafriq, Mr Tayo Ogunlade, concurred that the increase in digital payments comes with an increase in cybersecurity threats for the banks.
For him, beyond investment in IT infrastructure and cybersecurity, Nigerian banks would need to collaborate to strengthen the digital payment system and minimize risks.
“Everyone is connected or interconnected at some point and your biggest risk is where you have the weakest link. So, collaboration is where you get to identify those things, where you get to see how different parties can mitigate those things. Collaboration is key as much as increasing investment,” he said.
What you should know
The growth of e-business revenue for the banks is a reflection of the general growth in the electronic payment industry, where fintechs are also playing prominent roles. According to the latest data released by the Nigeria Inter-Bank Settlement System (NIBSS), electronic payment transactions in Nigeria rose to N234.4 trillion in the first quarter of 2024 as more Nigerians.
- The value recorded on the NIBSS Instant Payment (NIP), which encompasses internet banking, mobile apps, Unstructured Supplementary Service Data (USSD), POS, ATM, among others, represents an 89% increase over the N123.9 trillion recorded in Q1 2023.
- The NIBSS data also showed that from January to March, there was a steady rise in the amount of payment transactions carried out over the various electronic channels of banks and fintechs in the country.
- While the NIP transactions value rose to N72.1 trillion in January from N71.9 trillion recorded in December 2023, the value of electronic payments rose further to N79.3 million in February.
- By March, the value of electronic transactions in the country surged to an all-time high of N83 trillion.