Traditional banks have launched a spirited and highly innovative fightback against fintech payments service platforms that have been eating into their market share. Report by Michael Nwadike in Lagos
Simon Maurice, 30, was leaving home for work when his smartphone beeped with a familiar Facebook message alert. It was a reminder for him to send the monthly allowance to his 80-year-old mother living in Ijebu Ode, Ogun State.
His wife, Victoria Adun, had reminded him the previous night of the allowance and how badly his mother needed the money to pay her medical bills.
Three payment options came to his mind. The first was to pay through First Bank Nigeria’s internet banking platform; the other two options were to use Quickteller or the Paga network.
A few minutes later, he went for the Quickteller option. Quickteller and Paga are fintech platforms providing mobile money and digital payment services to consumers and are two of the top competitors to banks.
As little as the N100 ($0.28) fee from the transaction appears to be, it represents one of the millions of revenue leakages banks are fighting back to reclaim.
Fintech platforms such as Quickteller, Baxi, PocketMoni, Unified Payments, Paga, Remita 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 engaged in a furious competition 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 against the fintech 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 the 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 used 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 via non-traditional channels such as social media, empowering customers to a great extent.
Standard Chartered Nigeria says it has spent over $3bn in technology in the last three to five years. It recently launched its digital-only retail bank in Lagos.
Speaking at the launch, Lamin Manjang, the CEO of Standard Chartered Bank Nigeria and West Africa, said: “We are pleased to launch our digital bank in Africa with the support of the Central Bank of Nigeria (CBN). This is a key milestone on our digital journey as a bank and underlines our commitment to investing and growing in the market.
“We have been steadily investing in expanding our footprint in Africa over the years, launching earlier in Côte d’Ivoire, Ghana, Kenya and Tanzania, and this will continue to be a priority moving forward. Digitalising Africa remains at the heart of our business strategy for the region and we look to continue to grow our business in Nigeria as the best financial partner to our clients.”
He said Standard Chartered is on a branch optimisation and efficiency drive where digital marketing, web and mobile, artificial intelligence, virtual and voice contact centre all combine to improve 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, a zero charge on sms notification and a zero charge on all Automated Teller Machine (ATM) withdrawals.
David Idoru, head of retail banking, said the digital bank had been 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 to execute all banking activities from a mobile device,” he said.
Enhancing social banking
Wema Bank has also introduced Alat, a fully digital platform to enable it to capture the grassroots customers and the youth. 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 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 such a 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 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.
Chat with Leo
The United Bank for Africa introduced Leo, a chat banking personality, on social media platforms. The chat banking facility has already taken off on Messenger, having been jointly launched by the bank and Facebook.
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 which enables customers to 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.
Aishah Ahmad, Central Bank of Nigeria (CBN) deputy governor, called for a repositioning of the financial ecosystem to help extract the many gains while mitigating the attendant risks.
“Interestingly, to remain competitive, financial institutions rather than playing 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.