Banks’ making more profits from fintech adoption than physical branches—Akano
Upon the trending fears that payment service providers relying on financial technology (FintTech) are becoming serious threats to conventional banks in Nigeria, latest findings have shown that banks earned more revenue in the last financial year from adoption of FinTechs.
This was the revelation made by the Managing Director, Upperlink Limited, Mr Segun Akano while reviewing recent financial statements and audited reports of some banks in the just ended first quarter.
Akano noted that investment in technology for financial transaction was more profitable for Nigerian banks when compared with funds required to establish bank branches for customer’s transaction in the banking hall.
Continuing, he averred that due to the associated ease and flexibility, Nigerian bank customers’ now have preference for transactions at their convenience, especially on mobile devices which is powered by fintechs adopted by banks.
He said “Walk-in bank branch payments are reducing and it is an indication that consumers have accepted other channels of payments more, probably because of convenience and availability. Many people have embraced their phones because the banks have improved in terms of expanding their reach through these devices and it is more profitable for them too, obviously a win-win situation.
“Imagine a bank branch that has to deal with 2,000 customers a day; the services they need to provide a comfort level are quite enormous. The security arrangement, fear of misbehaviour, noises in banking halls, car park hassles, etc, then compare with where you don’t have to have physical contacts with these customers and yet your transactions are going via devices like mobile phones, laptops, ATM and PoS terminals.
“Certainly, transactions have not reduced; it is only the channels that keep experiencing different levels of traffic. While some are increasing, some are reducing but the traditional walk-in bank branch will continue to be a victim,” Akano averred.
Still on the imports of fintech leverage on the banking sector, a recent report compiled by Punch Newspaper showed that an analysis of the audited 2018 annual reports of 11 banks showed their revenue from electronic transactions grew by 43 per cent year-on-year from the N86.72bn earned by the financial institutions in 2017.
The report revealed that the revenue was generated from the fees and commission that the banks charge their customers when they carried out transactions through Automated Teller Machines, USSD, Internet banking, Point of Sale payments and agency banking.
Some of the banks assessed are Zenith Bank Plc, First City Monument Bank Plc, Access Bank Plc, Guaranty Trust Bank Plc, United Bank for Africa Plc, Sterling Bank Plc, First Bank of Nigeria Limited and Fidelity Bank Plc.
On the list are also Jaiz Bank Plc, Union Bank of Nigeria Plc, and Wema Bank Plc.
The report noted that First Bank earned the highest income on its electronic products in 2018, reporting N34.03bn revenue, a 36 per cent increase in revenue from N24.99bn in the corresponding period of 2017.
UBA ranked second, reporting N27.92bn revenue from electronic transactions, a 33 per cent increase from the N20.92bn generated during the same period in 2017.
With N20.42bn revenue, Zenith Bank reported a 44 per cent increase in its electronic banking income in 2018 as against N14.15bn earned in the preceding year.
