Digital banking is deciding whether banks will remain profitable. If you still doubt this truism, look no further.
We are in the period of Q3 quarterly financial results. The time of reckoning for banks, FMCG companies and other verticals to report to their shareholders.
While many results in the FMCG sector have been disappointing (although expected), the banking sector is showing some ‘glimmer of hope’ for investors and everyone interested in seeing the economy recover from doldrums.
However, there seems to be another bright spot coming from banking results so far released. While revenue from their core- interest income seems to be declining or not growing fast enough, revenue from fees and commission are seeing an upward trend.
In the case of GTBank PLC, interest income increased to NGN181 billion from NGN172 billion reported last year. This represents just about 5.2% year on year growth.
Conversely, GTBank reported that its revenue from fees and commission grew by 27.2% to NGN50,4 billion in Q3. Last year, GTBank recorded just about NGN39,6 billion for the same item.
What is this telling us?
Banking is becoming digital and automated than ever before. Apart from strategic imperatives and a stuttering economy which compels financial services providers to cut cost across expenditure pipelines, the times are changing very fast.
Data has now become the mainstay of telecom providers to stay afloat, banks will also need to take digital banking more serious than just a means to reducing overheads and cutting redundancy.
A major challenge confronting digitisation of financial services in Nigeria has been the slow roll-out of telecom infrastructure to back the ambition. Banks are also over-fixated on the short term bottom-line. Infrastructure bottlenecks might take a while to get cleared, banks will need to put digital at the centre of everything they do. Union Bank PLC gained more revenue when Atlas Mara Limited its majority owner revamped its digital relevance.
Digital banking is more than mobile money transfer or online banking. It is the future of financial services, where money is longer seen as a sacred minted paper and banks are no longer fancy buildings with heavy security presence.
Digital banking puts the customer in charge of their financial futures and allow banks to concentrate on what matters i.e working with entrepreneurs to build sustainable businesses and create jobs.