In the first half of 2024, seven Nigerian banks generated N132.45 billion from e-business operations, indicating a notable increase in the adoption of digital banking nationwide.
These banks include FBN Holdings, Zenith, GTCO Holdings, Stanbic IBTC, Wema, FCMB, and Sterling Financial Holding.
This sum reflects a significant gain for some leading financial institutions, who continue using technology to provide seamless services to their clients, as disclosed in their half-year 2024 financial results.
Banks make money from transactions their clients complete on digital platforms like Point of Sale (POS) terminals, Internet banking, mobile banking and payments, ATMs, and electronic funds transfers (EFT), which are referred to as e-business revenue.
How Much Money Each Bank Made
In particular, tier-1 bank Zenith became the top earner from e-business activities, bringing in N41.2 billion in the first half of 2024 – a whopping 85.6% rise over the N22.2 billion it brought in during the same period in 2023.
In the first half of 2024, FBN Holdings recorded N35.1 billion in sales from e-business, trailing only Zenith. This is a slight increase of 3.2% from N34 billion in H1 2023, suggesting consistent development in its digital service offerings.
In H1 2024, GTCO Holdings earned N32.5 billion, a 53.3% increase over N21.2 billion the previous year. The company also experienced notable development in its e-business operations. The bank’s increasing revenue can be attributed to its ongoing focus on improving its digital footprint.
In H1 2024, FCMB reported N10.8 billion in e-business revenue, a 45.9% rise from N7.4 billion in H1 2023.
In the first half of 2024, Wema Bank—renowned for its cutting-edge ALAT platform—reported N6.1 billion in e-business revenue. This represents a noteworthy 96.8% increase from N3.1 billion in H1 2023, demonstrating the bank’s expanding leadership in digital banking.
Sterling Financial Holdings saw a slight increase in its e-business revenue, generating N4.6 billion in H1 2024 compared to N4.4 billion in a similar period last year. This indicates a rise of 4.5% and reflects the bank’s consistent performance in the digital banking market.
With N2.1 billion in e-business revenue for the first half of 2024 and the first half of 2023, Stanbic IBTC showed no percentage change.
What This Indicates
Although Access Holdings and United Bank for Africa, two more tier-1 banks with a strong e-business presence, have not yet disclosed their Q2 earnings, the results of other banks demonstrate the increasing adoption of digital banking channels as clients move away from conventional banking methods.
An examination of the banks’ operating costs throughout the study period reveals that they also raised their spending during the six months to ramp up their IT infrastructure.
For example, GTCO boosted its IT spending by 115% this year, going from N17 billion in the first half of 2023 to N36.6 billion.
Additionally, Zenith Bank increased its IT expenditure by 167%, from N8.6 billion in the first half of 2023 to N23 billion in the second half of 2024.
In the same period, FCMB boosted its IT spending from N6.2 billion to N8.3 billion in the first half of 2024, while Stanbic IBTC spent N15.8 billion, up from N7.5 billion in the same period in 2023.
But as digital platforms become more widely used, “the banks should also expect a rise in cyber threats, including phishing attacks, ransomware, and data breaches, thus investing in cybersecurity is imperative,” says Mr Dipo Alabede, CEO of the mobile payment company Clane.
Furthermore, he stated that banks would need to strengthen their investments in IT infrastructure to stay ahead in the fiercely competitive world of digital payments.
“The financial industry is rapidly evolving with the entrance of fintech companies and new technologies like blockchain and artificial intelligence, even while banks are already seeing increase in digital transactions and income. They must raise their IT infrastructure expenditure to respond to these changes, integrate new technologies, and remain competitive,” he stated.
Speaking with Nairametrics, Mr. Tayo Ogunlade, Chief Technology Officer of Onafriq, agreed that as digital payments grow, so do banks’ cybersecurity risks.
For him, Nigerian banks would need to collaborate to develop the digital payment system and minimize risks beyond investment in IT infrastructure and cybersecurity.
“Everyone is connected or interconnected at some point, and your greatest risk is where you have the weakest link. So, cooperation is where you get to identify those issues and see how different parties can address them. Collaboration is as important as more investment,” he remarked.
What To Note
The rise in banks’ e-business revenue mirrors the broader expansion in the electronic payment sector, where fintech is also making significant contributions. The Nigeria Inter-Bank Settlement System (NIBSS) recently released data showing that as more Nigerians made electronic payments, the country’s total electronic payment volume reached N234.4 trillion in the first quarter of 2024.
The value listed on the NIBSS Instant Payment (NIP), which includes ATMs, POS terminals, mobile apps, Unstructured Supplementary Service Data (USSD), and internet banking, is 89% more than the N123.9 trillion listed in Q1 2023.
The NIBSS data also revealed a consistent increase in payments made through the nation’s banks and fintechs’ various electronic channels between January and March.
Electronic payments increased to N79.3 million in February 2023, while NIP transactions increased to N72.1 trillion in January from N71.9 trillion in December 2023.
The number of electronic transactions in the nation reached an unprecedented peak of N83 trillion by March.
