An overview on the Nigerian banking sector during and after the pandemic
2020
Financial services
This source will be discussing how the Nigerian banking sector was able to surge through a crisis
The key Takeaways:
Nigeria’s fintech landscape is recognized as being one of the most vibrant in Africa, with fintech investments growing by 197% over the past three years
This, in turn, has created a battleground for digital talent, already a scarce resource, and a critical enabler to help banks respond to the challenges they face.
While earnings in the sector have grown by a compound annual growth rate of approximately 23.5% in the past ten years, actual growth in real terms has been significantly lower at around 12%, with a sizeable portion coming from noncore banking activities such as fixed income and derivative income (swaps, futures, and forwards)
The thoughts and actions required beyond the crisis:
Scale: Define a segment or geography in which you can excel
our analysis shows that it is not total size across the diverse markets a bank serves that enables superior performance, but optimal scale within a given geography or segment. In Nigeria, significant opportunities remain for banks to develop scale across segments—for example by targeting small and medium-size enterprises (SMEs), which have significant unmet needs in the banking sector—or by targeting geographies such as the north of the country, which has been historically underserved.
Efficiency and productivity: Transform operating models to serve customers as they want to be served
Data and analytics: Leverage technology for commercial, risk, and operational effectiveness
Talent: Find the best people to support your shift to digital
5 Key Factors to watch to usher in the new wave of transformation:
Cash reserve ratio (CRR) policy: Balancing stability with economic stimulus
Banks’ capital base: Planning for another round of consolidation
Portfolio restructuring: Staving off another portfolio crisis
Regulatory collaboration: Streamlining regulation to support innovation and diversification
Shared services: Paving the way for the next growth area
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