Six banks generate N60.4bn from account maintenance, commission on E-banking activities

Despite severe competition in the payment service space, six banks generated N60.4billion from customer account maintenance charges and commissions on electronic-banking activities in 2022 financial year.

This is an increase of 15 per cent from N52.67billion reported in 2021 financial year.

The banks are: Fidelity Bank Plc, Sterling Bank Plc, FCMB Group Plc, Unity Bank Plc, Stanbic IBTC Holdings and Wema Bank Plc.

Nigerian banks faced severe challenges amid growing Financial Technology (FinTech) companies that created room for cheaper electronic funds transfer via mobile applications. 

The six Tier-2 banks generated a whopping sum of N219.77 billion from fees and commission in 2022 financial year, representing an increase of 14.3per cent from N192.22billion reported in 2021 financial year.

Banking analyst at Vetiva Research had noted that the new PSB licences issued by CBN to MTN Nigeria and Airtel posed a threat to some lines of the banks’ businesses in 2022.

In its 2022 Outlook titled “Running scared”, Vetiva Research projected that the headwinds observed in the banking sector in 2021 will start to ease.

The Banking Analyst at Vetiva, Joshua Odebisi in a statement stated that possibility of the new PSBs taking away a significant share of transaction fees and potentially lower revaluation gains.

The dispute between banks and telecommunication operators started over N42billion debts from Unstructured Supplementary Service Data (USSD) transactions, forcing the CBN and Nigerian Communications Commission (NCC) to intervene with new charges of N6.98 on any successfully USSD transaction.

Banks in April 2021 disconnected MTN subscribers from their banking channels, including the USSD and banking apps, as the mobile network operator switched its customers to alternative electronic payment platforms.

The telecommunication company reduced the banks’ commission from an average of 3.5 per cent to 2.5 per cent per transaction, prompting the actions of the banks to disconnect MTN subscribers from its service.

Analysts said that the entrance of MTN Nigeria and Airtel Africa into the financial services space will heighten competition especially with banks and Fintechs companies currently operating in the country.

They expressed further that,competition is necessary to drive financial inclusion through the provision of diverse and convenient financial services to the unbanked population.

Commenting also on the development, President, Bank Customers Association of Nigeria (BCAN), Dr. Uju Ogubunka, said the principal approval granted to MTN Nigeria and Airtel Africa is expected to impact on financial inclusion stakeholders have been talking about over the years.

He said: “So many people were excluded from the financial inclusion and with mobile companies involved in payment services, it will expand the scope and increase number of people in the financial affairs of the country.”

He added that the mobile money payment sector is going to witness competition with banks, given the outreach telecommunication companies have across the country.

“I think telecommunication companies are going to compete with banks and it may drive down cost and bring about efficiency in the sector. Once we have serious competition, we may have a reduction and customers will be looking for better price settlement,” he said.

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