Amid Fintechs Threat, Seven Banks Generate N495.57bn from E-banking, Others

Kayode Tokede

Despite the threat posed by Fintechs, which employed strategies such as zero charges on customers deposit and transfers, a total of seven Nigerian banks generated N495.57 billion from electronic-banking charges, account maintenance fees, among other charges in the 2023 financial year.

This represent an increase of 36 per cent from N365.11 billion reported in the 2022 financial year.

The seven banks are; FBN Holdings Plc, Stanbic IBTC Holdings Plc, Fidelity Bank Plc, FCMB Group Plc, Wema Bank Plc, Sterling Financial Holdings Company Plc and Jaiz Bank Plc.

Ananlysis of the banks’ 2023 results revealed that the banks generated significant increase from fees and commission on the backdrop of growth in customers’ base.

So far, the seven banks only released unaudited result and accounts for full year ended December 31, 2023 as market stakeholders await audited result and accounts. The likes of Zenith Bank Plc, Access Holdings Plc, among others are to announce audited results on or before April ending.

Nigerian banks are competing with Fintechs such as: MoMo Payment Service Bank (MoMo PSB), Fintech subsidiary of MTN Nigeria. Airtel SmartCash, Opay, Palmpay, others that charges customers zero charges on fund transfer to another Fintech company or banks.

As technology evolves, customer demands continue to affect how businesses operate especially in the banking sector. In recent times, fintech start-ups have raised the bar, offering customers easier, faster, and cheaper financial services particularly in areas such as zero transfer fees, more attractive interest rates on savings, full online banking experience, speed and simplicity.

These competitive advantages are endearing them to an increasing number of customers and strengthening their position in the industry.

With the emerges of more Fintech companies, electronic payment transactions in Nigeria hit an all-time high in 2023 as it rose by 55 per cent to N600 trillion, compared to N387 trillion in 2022, according to Nigeria Inter-Bank Settlement System (NIBSS).

THISDAY investigation revealed that electronic-banking income, foreign currency service fees and account maintenance fee are the two major drives of these banks’ fees and commission income in the period under review.

In the period under review, FBN Holdings announced N204.9 billion fees and commission income, a growth off 42 per cent from N143.98 billion in 2022, while Stanbic IBTC Holdings reported N117.84 billon fees and commission income, representing 23 per cent from N96.07 billion reported in 2022.

FBN Holdings generated N66.04 billion from Electronic banking fees in 2023 unaudited financial year, representing an increase of 20 per cent from N55.1 billion reported in 2022 and also generated N22.08 billion from account maintenance as against N19.88 billion reported in 2022

As FCMB Group declared N60.78 billion fee and commission income in 2023 unaudited result and accounts, an increase of 38 per cent from N44 billion in 2022, Fidelity Bank reported N44.91 billion fees and commission income in 2023, a growth of 44 per cent from N31.15billion reported in 2022.

Sterling Bank fees and commission grew by 17.6 per cent to N26.32 billion in 2023 from N22.28 billion in 2022, while Wema Bank announced N25.14 billion fees and commission income in 2023, a growth of 51.5 per cent from N16.59 billion declared in 2022.

In addition, Jaiz Bank declared N2.34 billion fees and commission in 2023, a growth of 43 per cent from N1.64 billon reported in 2022.

Financial market analysts said the management of some of the banks before now lacked ideas on how to find alternative sources of fees and commission.

They expressed that many commercial banks were engaging in exorbitant charges of customers and noted that the Central Bank of Nigeria had failed to sanction such banks.

Commenting, the CEO, Wyoming Capital and Partners, Mr. Tajudeen Olayinka stated that the growth in these seven banks fees and commission was largely underlined by income from increased transaction velocity across all channels and other e-businesses as well as credit related fees and commissions.

According to him, “banks gain traction on income from these lines as they extend retail and loan offerings. These banks witnessed increased transactions in 2023 and it is expected to impact on their fees and commission.’’

The Central Bank of Nigeria (CBN) had indirectly reintroduced Commission on Turnover fee as the Current Account Maintenance fee. The apex bank in 2013 commenced the phased reduction of the CoT, which terminated with the zero CoT charge this year.

But in a circular to banks recently, the CBN replaced the CoT with CAM but subject to a maximum of N1 per N1,000 mille.

The circular was titled, “Introduction of Negotiable Current Account Maintenance Fee Not Exceeding N1/mille,” it stated, “The revised guide to bank charges which came into effect on April 1, 2013 provides for a phased elimination of the COT charges in the Nigerian banking industry. Under the guidelines, a zero COT regime was to come into effect from January 2016.”

The CBN noted that while the gradual phase out was being observed, some banks continued to charge account maintenance fee in addition to the reduced COT rate, which in effect amounted to double coincidence of charges.

It stated, “The CBN is not oblivious of the impact of declining crude oil prices, operation of Treasury Single Account, and other market turbulence on the viability and stability of the banking system. “In furtherance of the mandate to promote and safeguard a sound financial system in Nigeria, banks are by this circular reminded that the 2016 Zero COT regime as jointly agreed during the 311th Bankers Committee meeting of February 12, 2013 has come into effect. In the interest of stability of the banking system, a Negotiable Current Account Maintenance Fee not exceeding N1 per mille may be charged in respect of all customer-induced debit transactions. Please ensure strict compliance.”