Emerging Trends in Banking and Financial Service Sector in Nigeria

Emerging Trends in Banking and Financial Service Sector in Nigeria

Nigeria is the most important financial service market in Africa. The country has a GDP of $397 billion, which is more than any other African country. In fact, Nigeria’s GDP is larger than that of some countries in Asia and South America. The financial market in Nigeria comprises the capital market, the money market,  as well as non-bank financial institutions. 

In Nigeria, the biggest growth sector in the last few years has been financial services with Fintech companies attracting the highest share of $120.6 million in FDI or foreign investments in 2020 in Nigeria’s tech sector. It won’t be admissible that the regulatory efforts by the Central Bank of Nigeria (CBN) in conjunction with innovations by industry players have led to these recent changes.

Financial services that do not embrace change will not stand a chance for healthy competition amongst their peers. This would seriously affect customer satisfaction, revenue growth, and operational efficiency. In this article, we share some insight on banking and financial services trends in Nigeria.

• Transition to Holdco

Basically, a holding company (Holdco) is a company that makes and manages (on behalf of itself) a portfolio of equity investments in two or more financial services companies, the bank of which must be one of them.

Previously in Nigeria, there were only three financial institutions operating Holdco structures namely; FBN Holdings,  FCMB Group, and Stanbic IBTC Holdings. The CBN in 2021, approved three more financial institutions namely; Guaranty Trust Bank, Access Bank Plc, and Sterling Bank to transition their operations to Holdco.

• Bank consolidation

As a result of the Central Bank of Nigeria (CBN) reform in 2004, many banks have been merged with other banks and the lesser producing ones have been acquired by top-tier banks.

Consolidation is one of the trends that characterize banking industry restructuring in Nigeria aimed at fostering the emergence of bigger banks yet a fewer number of banks.

• Super Banking Apps Taking over Physical Branches

As mobile and online banking has become increasingly popular with customers, banks are reducing spending on Branches to invest in self-service digital channels.

To keep up with fintechs and other competitors, banks are working to dominate more aspects of the digital world and human interaction by creating super applications embedded with various functionalities.

During this technologically advanced future, the ability of banks to transform themselves quickly and efficiently, as well as their ability to develop future strategies to survive the next revolution, will determine the winners and losers.

Our industry specialist consultants at Oscar Temple are always up-to-date with these trends that is how we are able to pride ourselves on the timely placement of talents in the banking and financial sector. With our access to top executive talents in our talent pool, you can be assured to get the best candidate(s) the industry has to offer.

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