Article Summary
- Nigeria’s tier 1 banks are set to generate a combined revenue of N392 billion from electronic business in 2023, with United Bank for Africa (UBA) leading the way.
- The increase in e-business revenue is due to the Central Bank of Nigeria's cashless policy, which has encouraged more Nigerians to utilize electronic banking channels.
- Meanwhile, banks also increased spending on IT infrastructure in the same year.
- Analysts suggest that despite the growth, banks will need to invest more in technology infrastructure to ensure seamless transactions and strengthen security, which will lead to further growth in e-commerce revenue. ing.
Nigeria’s top banks generated 392 billion naira in revenue from e-commerce in 2023 as cashless payments become more popular among Nigerians.
This amount was generated by the top five banks in the country: FBN Holdings, United Bank for Africa (UBA), GTCO Holdings, Access Holdings and Zenith Bank.
According to each bank's full-year financial results for 2023, their respective electronic business revenues for the year soared.
Specifically, the Union Bank of Africa (UBA) raked in N125.5 billion during the year, outperforming other banks in terms of revenue from this business unit.
This, compared to the 78.9 billion naira recorded in 2022, represents a 59% increase in the company’s e-business revenue.
Access Holdings earned N99.1 billion from the business, ranking second in e-business revenue for the year. The bank's electronic transactions increased by 66% in 2023 from 59.6 billion naira in the previous year.
Although FBN Holdings is yet to publish its audited financial statements for the current year, the interim results released for the period also show that the company's e-business revenue has increased from 55 billion naira in 2022 to 66 billion naira in 2023. It is shown that it has been done.
This represents a 20% increase in the company's electronic trading revenues, a figure that could be even higher by the time the company releases its audited financial results later this month.
Electronic business revenue includes revenue from electronic channels, card products, and related services. These channels include mobile applications, USSD channels, automated teller machines (ATMs), agent banks, internet banking, and point of sale (POS) payments.
GTCO, Zenith maintain growth
Although these figures are lower than those of UBA, Access and FBN, the other two tier 1 banks also recorded increases in e-business revenue for the year.
Zenith Bank generated revenues of NOK 51.8 billion from electronic transactions during the year. This is an increase of 13% compared to his 45.7 billion naira recorded in 2022.
GTCO Holding generated N40.8 billion in e-business revenue in 2023. This represents an 8% growth compared to his 37.7 billion Naira earned by the company in the previous year.
Meanwhile, a look at the financials of other banks reveals that e-business revenues are also increasing. FCMB, for example, saw electronic trading revenue increase by 26% to N17.7 billion in 2023.
Stanbic IBTC generated 4.4 billion naira, an increase of 76% from 2.5 billion naira in 2022, almost doubling its e-business revenue in 2023. Wema Bank also continued to grow, registering an increase in e-business during the same period. From 6.1 billion naira in 2022 to 7.3 billion naira in 2023.
Fidelity Bank's e-business revenue also surged from 2.8 billion naira in 2022 to 3.6 billion naira in 2023, representing a 29% year-on-year growth.
Tier 1 Bank IT Spending
A look at the operating expenses of tier 1 banks shows increased spending on ramping up IT infrastructure this year. For example, Access Holdings has increased its IT spending by 75% from N44.6 billion in 2022 to N78 billion in 2023.
Zenith Bank also increased its IT spend by 9% from N30.9 billion in 2022 to N33.6 billion in 2023. UBA recorded its highest e-business revenue spent on IT for the year, N23.2 billion, which is a 149% increase compared to the N9.3 billion the company spent in 2022.
GTCO Holdings spent N50.2 billion on IT infrastructure in 2023, representing an 18.6% increase in spending compared to N42.3 billion in 2022. FBN Holdings' IT spending figures are yet to be released.
Further insights
The rise in e-business revenues has been driven by the growing popularity of mobile and online banking in Nigeria, and as more people use these channels to access financial services, banks are seeing a corresponding increase in revenues.
Commenting on the increase in e-business revenues of banks, the Chief Executive Officer (CEO), Chronis Technology, Mr. Kayode Joseph, said the increase in e-business revenues of banks indicates that the Central Bank of Nigeria (CBN) cashless policy is having a positive effect, not only on banks but also on Nigerians.
“Many Nigerians are now realizing the convenience of electronic transactions. I believe this is an effect of the central bank's cashless policy which has limited the amount of cash that can be withdrawn in a day. This is positive for the Nigerian banking industry. That's a good sign,” he said.
However, he noted that banks need to make further investments in infrastructure to address the issue of transaction failures and protect their systems from fraud.
“Two factors that deter some Nigerians from using electronic transactions are transaction failures or network issues, and the issue of electronic transaction fraud. Banks enable seamless transactions and secure networks “If we can increase investment in technology for this purpose, e-business revenues will further increase,” he added.
The growth of electronic payments
Meanwhile, the rise in banks’ e-business revenue reflects the overall growth of the electronic payments industry, in which fintech also plays a key role.
E-payment transactions in Nigeria will rise to N600 trillion in 2023, a record high, as more Nigerians adopt cashless payments, according to data released by the Nigeria Interbank Settlement System (NIBSS). .
The value recorded in NIBSS Instant Payments (NIP) represents a 55% increase compared to the 387 trillion naira recorded in 2022.
Electronic payments data has shown steady growth throughout the year, but the highest value was recorded in December.
As it was a festive period with a lot of spending activities, Nigerians spent a total of N71.9 trillion on electronic channels in December 2023, marking the highest monthly record on the NIBSS electronic payment platform.
