Digitization is changing how people interact and do business on a day-to-day basis. Millennials and Gen-Zers are now constantly demanding for a digital banking experience which is transforming how banking in Nigeria operates. This growing desire of consumers to access financial services from digital channels has led to a large surge in new banking technologies that are changing basic concepts in the banking industry. The major Nigerian banks will be able to implement an effective technology strategy. This includes collaborating with FinTech companies to maintain their competitiveness. However, as less traditional competitors move into the space, banks may lose their competitive advantage.
Death Of Banks
While the predictions about the death of banks because of more technologically sophisticated competitors have been greatly exaggerated, the growth of technology has been a double-edged sword for Nigerian banks. On one hand, technology has helped banks generate additional revenue, reduce expenses, and manage risk exposure more proficiently. But it has also opened the door for a myriad of competitors, both large and small. These competitors are called Fintechs, a general catch-all term that seeks to generalize the interplay between financial firms and technology. This interaction between banks and fintechs is non-specific depending on the particular type of business that is being affected.
At this point, larger banks may not go out of business due to competition from more technologically advanced competitors. However, even larger banks acknowledge technology is a key strategic differentiator for long-term success. However, banks’ could lose their margins as less traditional competitors move into some of their business lines. Customers now expect more services to be available digitally and via a serve-yourself model. At the branch, many customers opt to skip the line for everyday transactions, making banking more digital than ever.
The Future of Banking
According to SPGlobal, more than 85% of consumers globally have used a self-service system and are comfortable with their experience. The newest generation of self-service kiosks goes beyond what traditional ATMs can do. Not only can customers withdraw cash and make deposits, but they can also open accounts, review their investment portfolios, explore perks, pay bills, and more. They can complete all these tasks anytime that’s convenient for them, even outside banking hours.
Mobile banking has become the go-to method for users to make deposits, account transfers, and monitor their spendings and earnings—and a key differentiator for banking leaders. Nearly 80% of people who have used mobile banking say it is the primary way they access their bank account. Since the onset of the coronavirus pandemic, mobile capabilities is a more significant factor in bank selection among respondents than it was last year. Financial institutions should understand which mobile banking features consumers value most and where they stand compared to their competitors, so they can pinpoint specific areas to devote the most attention to.
The foremost concern consumers have when mobile banking remains security. The fear of data breach increases the demand for services that keep users’ data secure. This allows consumers to place holds on credit or debit cards, schedule travel alerts. They can file and review card transaction disputes which are some successful security banking features.
Technology is shaping the future of both corporate and retail banking. Younger generations perceive the customer journey differently. They rely much less on bank branches compared to older generations as they are most engaged with unique, personalised experiences. That’s why we are expecting to see more of online banking in the coming years.
To be successful, the banks will need to embrace emerging technology, remain flexible to adopt evolving business models. They must put customers at the center of every strategy.
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Hi there! I’m Owen, a writer, designer, and a digital marketer. I create and manage content at OG Capital. I am a highly motivated individual who is very passionate about problem-solving. Reach out to me on social media and I will be more than happy to connect with you. Cheers!