The total N29 trillion electronic banking transactions within three months of the lockdown measures to lessen the spread of Covid-19 shows that Nigeria’s digital drive is moving on full throttle.
Nigeria’s digital sector accelerated faster than ever before between March and May when the coronavirus pandemic forces businesses across all sectors to ramp up online solutions for customers, resulting in a growing number of new digital converts and a flurry of electronic banking activities, since the index case of coronavirus in the country.
Data from Nigerian Inter-Bank Settlement System (NIBSS) showed bank depositors made electronic payment transactions through the point of sale (PoS) terminals, Nigeria Instant Payment (NIP), and Mobile Transfers totaling about N29 trillion between March and May 2020.
Breakdown of the figures showed that the value of PoS transactions was N999 trillion, which was a 38.5 percent increase from the N721.285 billion recorded in the same period in 2019; while NIP transactions stood at N28.383 trillion, and the value of Mobile transactions during the period hit N572.1 billion, compared with the N126.8 billion recorded in 2019 also in the same period.
Figures from NIBSS also showed a correlation between the increase of value transactions to the volume in March and May 2020, as Nigerians used Point of Sale (POS) machines deployed across the country 141.4 million times a 43.4% increase from 98.6 million volumes from 2019 while NIP volume rose to 383.7 million when compared to 271.86 in 2019 in the same period.
Mobile payments recorded the most impressive surge recording over 25 million transaction volume compared to 4.4 million within the same period in 2019, just as NIBSS figures showed a significant drop in cheque transaction volume to 858.454 from 2.09 million in within the same period in 2019.
Chinedu Obi, a 42-year trader in Lagos, who before the induced Covid-19 economic lockdown in March and April, had never seen a need for any digital banking services, in fact, according to him, not even an Automated Teller Machine (ATM) debit card is attached to any of his bank accounts.
Today, not only does Chinedu own a debit card; he also now has a Point of Sale(PoS) machine deployed in his shops at Alaba International Market.
“I and my family went through a lot during that period of lockdown and could barely feed. For the first time in my life, I was living at the mercy of others,” he says as he showed off his newly collected debit card.
“I have been afraid of the e-payment system, especially when you read the news on how people lose their hard earn money and the excessive charges associated, I had for long seen no reason to abandon my cash-based transactions, but after what I went through during the lockdown, and the risk associated in handling cash due to the pandemic, I was left with no choice”
It will be recalled that the Federal Ministry of Health confirmed its first case of Coronavirus, on the 27 February 2020, resulting in various restriction orders across the country.
While it can be argued that it is not just Covid-19 that is killing traditional banking services, analysts however are strong of the opinion the pandemic is in a long way accelerating the change in payments across the country.
“The pandemic has definitely affected the banking space and it has acted and will continue to act as a change catalyst for digital adoption by bank depositors,” says Isaac Morka Financial technology expert. “This is the best period for the federal government to fast track its plan for digital financial inclusion the more reason the N50 stamp duty on electronic transactions timing is very ill-advised.”
Demonstrating further the payments industry promising growth and the further adoption by Nigeria Populace, NIBSS further revealed during the period under review over 1.1 million new Point of Sales was deployed across the country, between March and June the biggest number of deployment within such period.
“More and more people will embrace e-payments, the opportunity is huge. There are now over 99.05 million internet users in Nigeria according to Statista, and with 111.538 active bank accounts in Nigeria,
More and more people will continue to adopt the use of the electronic payment, driven by internet and mobile penetration, already you see more PoS shops are springing up in markets streets bus parks, already there is a cultural shift and it will only get better” Morka added.
Banks are upping what they spend on technology
A cursory look at some of the first-quarter results of some banks revealed banks are spending more on their technology services, with focus more on improving the mobile and digital experience of their customers.
For Zenith Bank in the first quarter of this year, the bank spent over N3.2 billion in information technology an increased from N2.8 billion in 2019 with the same period.
Similarly, Access Bank increased its IT expenses by 76.3 percent to 5.5 billion from N3.1 billion.
For the United Bank for Africa (UBA), its information technology expenses were grouped with communication amounting to N2.4 billion a slight increase from N2.2 billion in 2019 during the same period.
The bank which recently announced an upgrade of its mobile banking application, introduced lots of exciting and interactive features to aid banking for its customers to perform unlimited transactions with simple taps on their mobile phones.
While Guaranty Trust Bank does not explicitly state how much it is spending on its information technology the bank in 2019, declared over N18 Billion Profit From Its Digital Banking Services and the banks has continued its relentless effort to improve its USSD and app transactions in a bid to make payments more convenient and faster for people.
Also, Callistus Obetta, Group Executive, Tech, and Services FirstBank recently told journalists that the bank is investing heavily in its digital IT strategy which includes its infrastructure strategy and security to help customers easily initiate digital transactions.
“I think with the advent of tech, any bank that doesn’t invest in it may not be relevant to the future. Online is the future and those who are not ready to make the necessary investment will be pushout in the future,” Kunle Ajayi a Fintech expert told InsideBusiness.ng.