It is quite evident that Nigerian banks are in war mode as the battle for digital supremacy switches from modest fisticuffs to a full-blown slugfest. The struggle for service space dominance rather than the power of physical place captures the essence of fintech entrepreneur Brett King’s recent observation that “banking is what you do and not where you go.”
The determination of the various local Nigerian banks to upstage one another in using mobile digital platforms to squeeze larger banking service market share is a fallout of the numbers for digital income growth available to them. And with telcos like MTN and Airtel easing into the payment service business as payment service banks (PSBs), the arena is set for a grand battle of gladiators with full buckets of financial blood scattered everywhere. The digital war will be gritty, ferocious, and unceasing.
Worthy of note is the fact that, the upper hand in the digital wars is not strictly a function of bank asset size, deposits, or capital strength, but the bank’s agility, vision, and business playbook. For example, the leader in Nigeria’s digital market space as of December 2021 was FCMB, a bank considered to be a tier 2 bank according to Proshare’s Bank Strength Index (PBSI).
As a proportion of gross earnings, FCMB had the best outcome for 2021, with digital banking income representing 12.31% of its total revenues. The proportion was 250 basis points above FBNH, which saw a ratio of digital revenue to gross earnings of 9.84% (in 9months 2021). UBA pulls behind FBNH at 9.78%. FBNH, which seemed to have slipped from the tier 1 ranking based on a revised calculation for tier 1 status, still pulled strength in the digital warrior league table. The table below shows the Weight of Banks’ Emerging Digital Transactions in 2021