NIGERIA:Despite Fintechs’ Incursion, Banks Rake in N25tn Deposits

Obinna Chima

Despite the surge in activities of financial technology (fintech) companies that have continued to encroach on commercial banks’ businesses, 11 banks in the country raked in a total of N24.957 trillion as customer deposits as at the end of 2018.

The amount represents an increase of 16 per cent compared with the N21.480 trillion the banks that are quoted on the Nigerian Stock Exchange recorded as at the end of 2017.

The banks are Zenith Bank Plc, Access Bank Plc, Guaranty Trust Bank Plc (GTBank), United Bank for Africa Plc (UBA), FBN Holdings Plc, Fidelity Bank Plc, FCMB Group, Ecobank Transnational Incorporated, Sterling Bank, Union Bank of Nigeria Plc, and Wema Bank Plc.

This amount is expected to rise further as recently released first quarter results of some of the banks showed higher customer deposits, due to their aggressive mobilisation of funds.

Fintech have continued to encroach on commercial banks’ businesses, thereby threatening the operations and deposit mobilisation by the banks.

For instance, a recent report had shown that some fintech firms have started targeting the deposit and loans segments of traditional banks, with a view to taking part of the market share of the financial institutions.

The report by Lagos-based Financial Derivatives Company Limited (FDC), had cited an example of Piggybank, which uses recurring card payments to allow its customers create and fund a savings account on their mobile phone.

This, according to the report, has proven popular among working class Nigerian youths as it offers an alternative to a traditional fixed deposit account, which requires a number of visits to a physical branch to set up.

Indeed, as technologies evolve, customer taste and lifestyles also change, prompting the development of technology solutions that would meet customers’ needs and lifestyles, as they relate to financial transactions.

But despite the threat by Fintech, the compilation of the banks’ results for the year ended December 31, 2018, by THISDAY showed that all the financial institutions posted higher customer deposits.

For instance, while Ecobank Transnational Incorporated recorded N5.803 trillion customer deposits as at the end of December 2018, higher than the N4.652 trillion the pan-African bank garnered in 2017; Zenith Bank’s customer deposits also climbed to N3.690 trillion at the end of 2018, up from the N3.438 trillion recorded in 2017; FBN Holdings’ customer deposits also grew to N3.486 trillion last year, higher than the N3.143 trillion the holding company posted at the end of 2017; while the United Bank for Africa’s customer deposits also advanced to N3.349 trillion at the end of 2018, higher than N2.733 trillion the bank recorded at the end of 2017.

Similarly, while Access Bank posted total customer deposit of N2.564 trillion at the end of 2018, up from the N2.245 trillion posted in 2017; Guaranty Trust Bank Plc’s customer deposits also advanced to N2.274 trillion at the end of 2018, up from the N2.062 trillion the bank recorded the previous year.

The Central Bank of Nigeria (CBN) had unveiled the operational guidelines for the Payment Service Banks (PSBs) in the country.

The PSBs which have been largely seen to also challenge the banks in terms of deposit mobilisation, are to operate mostly in the rural areas and unbanked locations, targeting financially excluded persons, with not less than 25 per cent financial service touch points in such rural areas as defined by the CBN from time to time, the guidelines said.

According to the CBN, the key objective of setting up PSBs is to enhance financial inclusion by increasing access to deposit products and payment/remittance services to small businesses, low-income households and other financially excluded entities through high-volume low-value transactions in a secured technology-driven environment.