An article titled “Banks and E-business challenge in 2008″, highlighting the challenges associated with optimizing the gains of recent market capitalization by banks in Nigeria, is a must-read for everyone especially for current and/or potential investors of shares/stocks from Nigeria Banks.

The article published by the Vanguard online and written by Tim Akano, amongst other things pointed out:

• that banks now have easy and faster ability to raise funds through public offers and other market capitalization strategies
• Of the top 100 companies in Nigeria currently, 14 of the 20 biggest, fastest growing, and most profitable companies are banks
• banks stocks are the most active representing more than fifty per cent of the daily transactions on the stock exchange
• these market growth and easy access to funding has led to rise in armed robbery across the nation’s financial institutions
• there has been increased partnership with global banks with a view to leveraging on their experiences and strengths to enable them manage the juicy Nigeria foreign reserves
• the economy is now at the beck and call of the nation’s top banks, mainly because 70 per cent of the total assets of the banks are owned by the top ten banks and the capacity utilization in the real sector is below 40%
• CEOs of banks need to learn lessons from the 1990s collapse of the Japanese banks and also from the recent mortgage crisis faced by Citigroup, Countrywide, and Merrill Lynch
• the nation cannot afford to leave banking totally to the bankers to avoid economic monopoly since the only active players left in the economic playing field are the banks- the other players are wounded- either limping (Oil &Gas –no thanks to the Niger Delta crisis), or in the case of manufacturing, consigned to the wheel chair

The author compared the situations in Japan and then submitted that “unarguably, some of the variables that led to the collapse of the Japanese financial sector are also present in present day Nigeria: land speculation, weak internal process, ‘blue chips syndrome’, absence of a structured succession plan, staff poaching, inadequate skilled workforce and a weak Real/SME sector to enhance consumption”.

Mr. Akano suggested that e-business will be a critical success factor in the banking sector if banks are to gain any major competitive advantage and overcome the stated challenges. E-banking as currently practiced in Nigeria, according to him, is fraught with problems ranging from customer frustration and failed promises.

I totally agree with the fact-based views of the writer. As a student of E-Commerce myself, I have watched with apt, the way e-commerce is supposedly practiced in Nigeria. Even the developed economies like the USA, UK, and Japan, all face challenges of fraud, identity theft, and un-legislated realm of the Internet as a tool for commerce.

Nigeria with her epileptic internet, electricity, and advanced fee fraud aka 419 problems, as well as slow broadband connectivity and adoption, is by my own candid opinion, not ready for the big time. The C-Level executives of these financial institutions are mostly uneducated when it comes to trading on the internet. How then can they champion their respective organizations in that direction? Information Technology to which e-banking falls under, requires executive buy-in to have a chance at success. However, the question is to what extent can this top level excos, take the risks associated with doing business, especially real banking online?

The USA and other developed countries are now moving from e-banking to m-banking (mobile banking via wireless cellphones). This did not happen overnight. It took years of convincing for top Execs to finally cave in to allow their customers to bank via mobile devices. Even at that, it is highly moderated with less capabilities. In Asian countries like India, China, Indonesia and Philippines, where mobile infrastructure is comparatively better than the fixed-line infrastructure, and in European countries, where mobile phone penetration is very high (at least 80% of consumers use a mobile phone), mobile banking is likely to appeal even more.

The long and short of this is that bank executives in Nigeria should invest in technology and education of top executives, to fully understand the implications and risks associated with e-banking before putting their hands in it. The Federal Government also has a huge part to play in this. By fulfilling years of stable electricity promise, technology can be allowed to move forward, thereby making the joy of true e-banking a reality in Nigeria.

Click here to read the original article on the Vanguard Online website

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