Even in the face of fierce competition from Fintechs, individuals and institutions are increasingly entrusting their funds into the safekeeping and management of Nigerian banks as total deposits in the banking sector rose to N115 trillion in the 2023 fiscal year, about 63 per cent growth from N70.5 trillion reported in 2022 financial year.
Analysis of the 2023 audited results of banks operating in Nigeria, revealed a surge in low-cost deposits amid severe challenges posed by Fintech companies, according to ThisDay.
In recent years, Fintech firms like MoMo Payment Service Bank (MoMo PSB), an MTN Nigeria Fintech affiliate, have fiercely competed with Nigerian banks. Among the programs that provide attractive interest rates on deposits are Airtel SmartCash, PiggyVest, Opay, and Palmpay.
Customer demands continue to impact how organizations operate, particularly in the banking industry, as technology advances.
Fintechs have lifted the bar recently by providing consumers with simpler, quicker, and more affordable financial services, especially in areas like free transfers, savings accounts with higher interest rates, complete online banking, and speed and ease of use.
Fintechs’ competitive advantage is helping them win over more clients and solidify their place in the market.
According to the Nigeria Inter-Bank Settlement System (NIBSS), the number of electronic payment transactions in Nigeria reached an all-time high in 2023, rising by 55% to N600 trillion from N387 trillion in 2022, as more Fintechs emerged.
However, data provided to the Nigerian Exchange Limited (NGX) and others made available by industry associations demonstrated remarkable increases in all bank cadres and tiers, with newly founded and middle-tier banks effectively competing with the largest and first-generation banks.
According to the report, two Pan-African banking institutions, Ecobank Transnational Incorporated (ETI) Plc and Access Holdings Plc, which have branches in more than 30 African nations, topped the deposits chart last year.
In 2023, ETI topped the table with over N20.52 trillion in deposits, representing about a 91% increase from N10.73 trillion in 2022.
Meanwhile, Access Holdings reported N19.76 trillion bank deposits in 2023, a 76% rise from N11.26 trillion reported in the 2022 fiscal year.
UBA reported N17.36 trillion in customer deposits, a 93% rise from N8.99 trillion in 2022. Deposits at Zenith Bank increased to N15.18 trillion in 2023 from N8.98 trillion recorded in 2022, showing a 69% increase.
Meanwhile, FCMB Group increased deposits from N2.07 trillion in 2022 to N3.4 trillion in 2023, a growth of around 63%.
Further analysis reveals that Premium Trust Bank, a national commercial bank that started operations in April 2022, increased its deposit base by 382% from N55 billion in December 2022 to N265 billion in December 2023. Polaris Bank reported N1.09 trillion in deposits in 2023.
Commenting, the CEO of Wyoming Capital and Partners, Mr. Tajudeen Olayinka said the financial sector’s surplus liquidity and industry competition are the main causes of the rising deposits in the banking sector.
He pointed out that banks are starting to look into different ways to increase deposits to remain relevant and lend to the real sector.
The Federal Reserve Board (FRB) described deposits as, “the primary funding source for most banks and, as a result, have a significant effect on a bank’s liquidity. Banks use deposits in a variety of ways, primarily to fund loans and investments.”
