Traditional banks are launching a comeback to reclaim marketshare they lost to Fintechs. The banks are not only investing over $2bn annually on new technology but developing new products and services that appeal to the youths who are the biggest target by Fintechs.
Martins Okon, 30, was leaving home for work when his smartphone beeped with a familiar Facebook message alert. It was a reminder for him to send monthly allowance to his 80 year-old mother living in Ijebu Ode, Ogun State. His wife, Ifeoma Kingsley, had reminded him the previous night of the allowance and how badly his mother needed the money to pay her medical bills.
Two payment options came to his mind. The first was to pay through internet banking platform of First Bank Nigeria. The other two options were to use Quickteller or Paga network. Few minutes later, he went for the Quickteller option. Quickteller and Paga are Financial Technology (Fintech) providing mobile money and digital payment services to consumers and are top competitors to banks.
As little as the N100 fee from the transaction seems, it represents one of the millions of revenue leakages banks are fighting back to reclaim.Fintechs, such as Quick-teller, MoniDey, Baxi, PocketMoni, Unified Payments, Paga, Remitta and Cellulant, are now part of the financial system, offering banking services to both the banked and unbanked.
Demola Odeyemi, executive director, international banking operations at Guaranty Trust Bank Plc, said banks are now competing with Fintechs and that retail banking and funds transfer have the highest likelihood of disruption at 92% and 85% respectively. Odeyemi said banks are fighting back Fintechs competition by digitally transforming their business model from being a ‘bank’ to being a ‘platform’. He said banks are taking a ‘mobile-first’ approach to reach out to consumers, by designing their products and services with the aim of enhancing customer engagement via mobile.
He said banks are also doing social lending on Facebook where a large part of the youth population is active. The practice is dislodging Fintechs in that space where they previously use to lend to customers with poor credit scores or those unable to get loans from traditional banks. Like Fintechs, banks are prioritising 24/7 access and offer services available via non-traditional channels such as social media, empowering customers to a great extent.
Standard Chartered, Nigeria said said it has spent over $3bn in technology in the last three to five years . Lamin Manjiang, its chief executive officer disclosed this during the unveiling of the bank’s first digital bank: Capturing the Digital the Initiative (CDI) in Lagos. “It is really about making easy, convenient and secure for our clients and we think we are spending what we need to spend to achieve this,” he said.
Manjiang said Africa is strategically important region where we have been investing steadily over the years. Nigeria is ranked the 26th largest economy in the world and the largest in Africa. Nigeria accounts for nearly 20% of the continent’s gross domestic product (GDP) of about 75% of the West Africa economy. We believe the CDI is a great opportunity for the economy,” Manjiang said.
He said Standard Chartered is on branch optimisation and efficiency drive where digital marketing, web and mobile, artificial intelligence , virtual and voice contact centre become the interface between the bank and the customer. The bank also launched a digital banking app, the Standard Chartered Mobile 2.0, to better connect with the country’s youthful population and make banking services easier for them. The app offers savings accounts, current accounts, fixed deposits, lending, and wealth management solutions. It also offers zero charges on all inter-bank transfers, zero charge on sms notification and zero charge on all Automated Teller Machine (ATM) withdrawals. David Idoru, head of retail banking, said the digital bank was developed with clients in mind. “We have also taken into consideration the feedback received by our clients at each stage of the design process and have incorporated innovative technology to allow them execute all banking activities from a mobile device,” he said.
Wema Bank has also introduced Alat, a fully digital platform to enable it capture the grassroots customers and the youths. Beyond the savings and investment options, Alat, mostly embraced by young people, offers complementary features that help improve and sustain saving habits. FirstBank, Fidelity Bank and Union Banks have equally partnered with PayPal to enhance online payment for shoppers. The partnership enables the lenders’ customers to register for a PayPal account from their internet-banking accounts.
By linking their-issued debit, prepaid or credit cards to their new PayPal account, customers can then shop and pay on millions of websites around the world from their personal computers, tablets or smartphones, without having to share financial information with the seller.
The GTBank Instant, First Instant and Sterling Social Lender accounts were built by GTBank, FirstBank and Sterling Bank respectively to enhance social banking. Here, customers can open accounts online, and that creates convenience for them.
Sterling Bank’s Social Lender Account allows it to grant loans to customers on Facebook. It provides a platform for online fans, followers who are customers of the bank to obtain micro-credit loans via social media starting with Facebook and Twitter.
Mercy Obi, a customer who benefitted from the loan, narrated her experience: “While going to Yaba some days ago, I had no cash in my wallet. I needed cash badly. My cheque book was not even with me. I couldn’t find my bank branch around because I wasn’t familiar with the area. “So, I tweeted at the handle of my bank. The response was swift. In 10 minutes, my account was credited with $8.28 short term credit. That is how interesting banking has become,” she said.
The United Bank for Africa introduced Leo, a chat banking personality on social media platforms. The bank launched the product in collaboration with Facebook, as the transaction is carried out on the Facebook Messenger. The chat banking has already taken off in the Facebook Messenger.
Kennedy Uzoka, group managing director/UBA Plc , described Leo as a solution developed with people’s lifestyles in mind. He described Leo as the UBA Chat Banker who enables customers make use of their social media accounts to carry out key banking transactions. The transactions, he said, are done through mobile phones, which have become synonymous with modern day banking. He explained that with Leo, one’s banking needs become easy and as simple as chatting. Aisha Ahmad, Central Bank of Nigeria (CBN) deputy governor, called for the repositioning the financial ecosystem to help extract the many gains while mitigating the attendant risks. “Interestingly, to remain competitive, financial institutions rather than play catch-up, are at the fore of the digital revolution through the provision of innovative digital services; the UBA “Leo” App, “Tamada” by Access Bank and other innovations aptly illustrate this point,” she said.
Godwin Emefiele, CBN governor said banking has a common threat adding that banks have spent over $2bn in the last one year in the acquisition of hardware and software solutions. This, he added, will ensure that Nigeria addresses emerging opportunities and challenges in the digital era.
