As digital innovation positions as the future of payments, opportunities abound for organisations and financial institutions to solve some of the world’s biggest challenges and enhance large-scale productivity.
Indeed, digital banking in Nigeria has evolved significantly to become an integral part of our daily activities, driving financial inclusion, e-commerce, utilities and effective daily solutions.
For innovations around digital banking, these are being powered Fintech firms, and as traditional banks stand on the sidelines, Fintechs (most of which are strictly neobanks) began to swiftly launch investments and savings products that appealed to everyone.
The importance of quick access to finance cannot be underestimated, and with financial exclusion still a barrier in Nigeria, only digital innovation in banking can influence growth in the sector.
What the traditional banks began to learn from this is that individuals are constantly looking for the most convenient ways to carry out transactions to eliminate the time spent in physical banks as much as possible.
Once this existing gap was identified, traditional banks became challenged to penetrate the digital banking space tailored to the needs of the everyday consumer, to encourage the financial inclusion mandate from the Central Bank of Nigeria (CBN).
A recent Nigeria Inter-Bank Settlement System (NIBSS) report put the total number of depositors’ bank accounts at 123.9 million as at September 2019, with at 74.7 million total active accounts, and 69.0 million active customers (individuals).
The future of banking is moving towards outstanding customer satisfaction as customers perceive financial institutions as no longer “places where people go to bank”, but as “organisations customers choose for financial transactions,” and therefore have more choices to access convenient banking.
In this regard, digitalisation will no longer be seen as a destination, but as the path to superior client experience.
While banks might feel threatened by Fintechs, who want a piece of the pie, it is also important to realise that collaboration will push the industry further.
A good number of Fintechs come with a great source of talent, ideas and new technologies that banks as stand-alone may not possess in good capacity.
Digital banking resonates more with one that serves its clients without them needing to come to the branch if they don’t want to; not even to open an account, and this means giving people the choice to do everything digitally from their mobile phones.
For the Head, Retail Banking, Standard Chartered Bank Nigeria, David Idoru, banks should look to move digital banking forward by leveraging collaborations with Fintechs in the coming years.
He said: “We all must sit up and embrace digital bank, wherein lies the true satisfaction of the customer. While the obvious financial inclusion challenge is something we are keen to addressing, we ask ourselves, ‘is this a problem that digital banking and innovation can solve? Yes, it certainly is.’ To buttress this, a report demonstrated that 59 per cent of Nigerian customers prefer digital methods of banking, with only about 15 per cent still fixed on the traditional form.
“Nigerians are now experiencing a branchless, digital bank that offers savings accounts, current accounts, fixed deposits (with the option of joint accounts) along with lending and wealth management solutions and a client onboarding process that takes only 10 minutes.
“This kind of innovation is possible due to the level of investments we have made to ensure that it delivers digital banking comparable to none. In the last three to five years, Standard Chartered has invested over $3billion in technologies.
“We have also taken a ‘Capturing the Digital Initiative’ approach that ensures that about 70 per cent of the most common service requests can be handled by our digital bank with distinct benefits such as a zero charge on all interbank transactions, zero charges on SMS notifications and free delivery of cards to customers regardless of location.”
The Head, Economic Research and Policy Management, Securities and Exchange Commission (SEC), Dr Afolabi Olowookere, said digital technology is the key to navigating global issues inhibiting the free flow of financial services.
“For instance, people use telephone to open bank account, and you can use USSD to transfer money. In the case of Kenya, through M-Pesa, people save on their phone and they use phone to buy stocks, so Nigeria is also getting there gradually.