Nairametrics| One of the biggest banks in the country in terms of share capitalization and size, First bank has decided to focus on digital and electronic banking. Group MD of the bank, Dr Adesola Adeduntan disclosed this in an interview recently. Various developments in the banking sector may have contributed to the change in focus.
The run- away success of GT bank’s USSD service, 737 seems to have jolted the banking industry to focus on mobile and electronic banking. Several banks have come up with their own version but have not been that successful. Tough macroeconomic conditions have made many banks to slow down on lending and cleaning up their books. First bank had impairments of N226 billion for the financial year ended December 2016, the largest among listed banks. The huge impairment provisions have also continued into the first quarter of 2017, with impairments of N28 billion. First bank has recently undergone a management shakeup, appointing a new MD for both the bank and the holding company.
Electronic transaction fees increased from N15.3 billion in 2015 to N21 billion in 2016. The bank may have thus decided to focus on areas of growth. Several analyst reports have shown a gradual shift into mobile and electronic banking especially among the younger generation. Not moving with the times, will mean the bank missing out on several customers.
Going digital will also help the bank to cut costs. Even though management has not signified intentions to shut down any branches, with around 750 in number, cutting costs will be a priority. Expenses on communication, lights and power increased from N1.3 billion in first quarter 2016 to N2.2 billion in first quarter 2017. Moving towards to digital will mean less staff will be needed and a drop in operational costs. Year to date, shares of the bank are up 5.37%, beating the All Share Index which is down 1.70%.