The Emergence Of Digital Banks In Nigeria

I will not lie, when I installed my first digital bank app on my phone, I was a bit skeptical. Even as an  IT professional and enthusiast, I had my doubts. My doubts were not so much about the functionality of the app, my main concern was tied to my experience using the traditional brick and mortar banks in Nigeria!

Imagine opening a bank account with a financial institution that has no physical presence!

I gave it a shot anyways and after successfully creating an account, I transferred funds to my newly opened digital bank account. It has been three years since I opened my first digital account and it has been a seamless experience.

Currently, in Nigeria, there have been a lot of challenges using some of the most prominent banks. Frequent network failures have made a lot of customers ‘worried’ about their funds with these ‘brick and mortar’ banks and this has fostered a huge conversion of users from the standard banks to the digital banks.

One of the things that got my attention with the digital banks is the ease with which they give out loans. This ‘quick loan’ functionality made me feel more relaxed because I realized that as much as it was a risk opening an account with these ‘unseen’ banks, they were equally taking risks giving out loans to customers whom they had never seen or met before. It’s amazing how fast the funds hit your account after your loan is approved from these digital banks.

By the way, I created my corporate account for my business with a major bank in Nigeria in 2014 and till date they have not offered any assistance whatsoever to my business. On the other hand, these digital banks keep throwing loans in my face! Their algorithms study your financial behavior over time and they offer loans based on it with specified timelines and interest rates.

There are quite a number of these digital banks in Nigeria, some of which are Opay, Kuda, PalmPay, Branch, and Carbon to name a few, all tested and trusted.

While these digital banks are kind of new in the Nigeria space, the fact is that the world is rapidly shifting towards a more digitized environment, and the banking industry is no exception. With the advent of technology and the internet, traditional brick and mortar banking systems are now being challenged by digital banks. Digital banks are fully online financial institutions that offer banking services to customers without physical branches. These banks operate exclusively through online channels such as mobile apps, websites, and ATMs. In this article, we will discuss the emergence of digital banks and the advantages they have over traditional brick and mortar banking systems.

Advantages of Digital Banks

1. Convenient Banking
   
   Digital banks offer customers a convenient way to manage their finances. Customers can easily access their accounts, make transfers and pay bills from their mobile devices or computers. This eliminates the need to visit a physical branch, saving customers time and effort.
   
2. Lower Fees
   
   Digital banks have lower overhead costs than traditional banks, which means they can offer lower fees and higher interest rates to their customers. This is particularly beneficial for people who are looking to save money on banking fees.
   
3. Higher Interest Rates
   
   Because digital banks have lower overhead costs, they are able to offer higher interest rates on savings accounts than traditional banks. This is especially attractive for customers who are looking to grow their savings.
   
4. Advanced Security Features
   
   Digital banks have advanced security features that protect customers from fraud and identity theft. These banks use encryption technology to keep customer information safe and secure.
   
5. 24/7 Access to Customer Support
   
   Digital banks offer customers 24/7 access to customer support through online chat or phone. This ensures that customers can help with their banking needs whenever they need it.
   
6. Customized Products and Services
   
   Digital banks offer customized products and services to meet the specific needs of their customers. This includes features such as personalized savings goals, budget tracking, and financial planning tools.
   
7. Quick access to loans
   
   Digital banks make it easier for you to access quick loans that are disbursed to your account immediately they have been approved (in a few hours).

Summary

The emergence of digital banks has revolutionized the banking industry, especially in Nigeria as it eases financial inclusion in an economy where there are so many ‘unbanked’. Digital banks offer customers a convenient way to manage their finances without joining long queues and racing to the bank before 4pm! They offer lower fees, higher interest rates, advanced security features, 24/7 access to customer support, and customized products and services. As more people embrace digital banking, it is likely that traditional brick and mortar banking systems will continue to decline in popularity.