Digital banking: Access Bank, UBA, others jostle for market share

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Only recently, the United Bank for Africa (UBA) announced plans to change the face of digital banking services with a new mobile app.

According to UBA’s Group Head, Digital Banking, Kayode Ishola, the new mobile app will not only able to decide where customers want their cards to operate and block, view, or request new cards straight from the app to suit their specific needs, the app has been tailor-made to give customers what they want, how and in the way they want it.

UBA is just one out of the many banks pushing the digital banking playfield into a more aggressive area of competitiveness as incomes from digital operations become increasingly significant to deposit money banks (DMBs)

The competition will become intense as banks assert greater influence over informal market payment and settlement transactions but beyond payments, the banks will battle for micro-lending business which may start with micro-leasing, micro-insurance, and sale and leaseback arrangements for microenterprises.

In 2020 Nigerian banks were believed to have seen a surge in digital incomes as a result of the COVID-19 global health pandemic as customers opted for the purportedly friendlier electronic platforms for conducting their businesses.

Nigeria’s biggest banks appear to have made the jump on their Tier 2 rivals as revenues from digital transactions rose for the bigger banks relative to their smaller competitors.

For example, between 2019 and 2020 Access Bank Plc saw electronic banking income rise from N18.96bn in 2019 to N38.79bn in 2020 representing a growth of +104.5 per cent.

This is not surprising, Access Bank has been one of the most aggressive banks in the race for digital dominance, and its acquisition of Diamond Bank in 2019 gave it a major boost in upscaling its digital distribution and technical capacity.

UBA came in with lower growth in its digital income between 2019 and 2020 with its e-banking revenue rising from N26bn in 2019 to N27.87bn in 2020, the rise was +7.19 per cent which was comparatively slim compared to the industry leader in this business segment.

Coming behind UBA between 2019 and 2020 was Ecobank Transnational Incorporated, ETI. Its electronic banking income rose mildly by +5.90 per cent from N27.81bn in 2019 to N29.45bn in 2020. Surprisingly, the bank lagged well behind their fellow Tier 1 competitor, Access Bank, in e-revenues.

Nigeria’s oldest banking brand, FBN Holdings revenue slithered marginally upwards by +1.56 per cent from N48.03bn in 2019 to N48.78bn in 2020, however, revenue growth from its digital banking business has not been preppy.

The most harshly affected bank by falling digital banking income was Zenith Bank Plc which saw digital income slide by -47.74 per cent. This was followed by Wema Bank where electronic banking revenue slumped from N2.79bn in 2019 to N2.02bn in 2020, the drop represented a -27.60 per cent decline.

Close on the heels of the Wema Bank drop was GT Bank which slid -25.63 per cent from N11.04bn in 2019 to N8.21bn in 2020, the GT Bank and Zenith Bank dips were worrisome as both banks were considered prime movers of the digital banking makeover and belong to the rarefied group of Tier 1 DMBs.

The battle for the lower consumer pyramid will become hard, fast, and uncompromising as the bigger banks attempt to rapidly expand their agency banking spread despite the constraints imposed by the COVID-19 pandemic.

In a recent African Digital Banking Transformation Report 2020 which was published by the African Banker magazine and titled “Building a Digital-First Bank”, the report noted that “The number of Africans with bank accounts increased from 170m in 2012 to nearly 300m in 2017 and is forecast to reach 450m by 2022, according to consultants McKinsey.

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