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Nigeria’s leading financial information platform, Proshare, has released its latest Tier 1 banks report, “Getting Bigger, Braver, and Dominant – The Class of 2025”.
The report argues that the country’s top banks need to be more imaginative, agile, and flexible to support the government’s goal of growing the economy to $1 trillion by 2030.
According to Proshare, the banks will need to deconstruct Nigeria’s 46 sectors into 14 sub-economies and find creative ways to offer medium- to long-term financing options to emerging growth sectors.
The report identifies potential beneficiaries of the banks’ recapitalization as the Marine and Blue Economy, Entertainment and Arts Economy, Hospitality and Real Estate Economy, and Mineral Mining and Energy Economies.
The report ranks six banks as Tier 1 banks based on the Proshare Bank Strength Index (PBSI), which includes Ecobank Transnational Incorporated (ETI), Access Corporation (ACCESSCORP), First Bank Holdings (FIRSTHOLDCO), Zenith Bank, United Bank for Africa (UBA), and Guaranty Trust Holding Company (GTCO).
The report highlights the need for banks to focus on digital transformation, asset quality, and governance metrics to remain competitive. It also notes that the banking landscape will change significantly with the adoption of artificial intelligence (AI) and fintech integration.
Proshare analysts believe that the next half-decade will see significant changes in the banking sector, with Tier 1 banks ramping up digital services and investing heavily in technology.
The report which argued that certain factors will separate Nigeria’s banking sector best from the rest, noted that, “Zoning in on the behavioural habits of different corporate and retail customers will be a key factor in service delivery excellence, utilising AI as a significant tool for product and service design.
“Remaining agile and flexible regardless of corporate size will enable leading banks to meet evolving customer expectations. In the new banking reality, elephants must dance or learn to.
“Co-opetition with fintechs will distinguish the winners from the losers in the money market, as the digital agility of fintechs will offer customers the frontend convenience they seek. Concurrently, the backend rigour of banks in the lending process will guarantee high-quality loan portfolios and sound credit decisions. However, this may raise the question of who truly owns the customer: the bank or the fintech? The jury is still out on this matter. Strong arguments exist for both types of lending institutions.
“The age of artificial intelligence (AI) will change the banking landscape, making deposit and loan services a routine digital entry of codes. The loan approval process will be linked to a customer’s cash-to-cash cycle, assessed for risk and reliability, or payment based on their past transaction history stored in the encrypted data cache of a bank or fintech’s cloud storage.
“The decoupling of many financial decisions from human biases may improve the credit process exponentially, depending on which side of the fence you are sitting on.
“Tier 1 banks will ramp up digital faster and for longer. Their immense investment in technology and intense competitiveness mean that over the next half-decade. At the same time, banks, as we know them, will slowly fade away, and banking will evolve to act as a smooth and well-oiled intermediary between different customer needs and available financial resources”, it added.
The report concludes that banks will need to adapt to evolving customer expectations and technological advancements to remain relevant.
In his comment, the Chairman/Founder Proshare, Mr. Olufemi Awoyemi said Nigerian banks are on the cusp of a new era marked by intensified competition, digital service delivery, and critical market positioning.
According to him, the relationship between conventional banks and neobanks will become increasingly complex, with collaboration and competition coexisting.
However, he predicts that conventional banks will ultimately prevail as investors in fintechs demand returns on their investments and regulators impose stricter guidelines.
He highlights the shift towards digital solutions, driven by blockchain technology and artificial intelligence (AI), which may gradually replace traditional brick-and-mortar financial institutions.
“The biggest challenge for Nigerian banks in the coming years will be battling for market share and retaining customers through their transaction journeys. As the banking landscape evolves, banks will need to adapt to stay competitive and relevant.
