How can Nigerian banks start to improve internet banking penetration?
Nigerians love the internet. The country is estimated to have more than 148 million mobile telephone subscribers and at least 92 million of them access internet data services on their devices. And, with around one-third of Nigeria’s population now under 24 years old and a growing middle class population, all signs suggest that internet penetration and usage is set to grow significantly.
In particular, social media channels are gaining significant adoption in Nigeria. Platforms such as Facebook, Instagram, Twitter, LinkedIn and Tumblr are widely used by Nigerians as a way to communicate with friends and the wider public.
In fact, according to our survey, 77 percent of Nigeria’s banking customers now use social media for personal purposes. The problem is that Nigeria’s banks have largely failed to translate this passion for the internet and social media into increased adoption of internet and mobile banking solutions. Just 42 percent of Nigerian banking customers said they use online banking platforms for one or more banking activities.
And just 40 percent said they have interacted with their bank using social media in the past. The benefits of shifting transactions to web-based platforms are clear. For customers, web-based platforms offer convenience, 24 / 7 access, and freedom of location. For Nigeria’s banks, the shift promises the opportunity to improve service delivery and achieve a lower cost-to-serve.
So why are Nigerian banks struggling to move customers to internet and mobile banking platforms?
Nigeria’s banks have certainly put significant investment and effort into developing a better and easier online banking system. And Nigeria’s customers have certainly proven themselves to be internet savvy.
Part of the problem relates to conversion. More than two-thirds of Nigerian banking customers say they have never tried their bank’s online platform. So while Nigerian banking halls are often filled with customers happily using their phones to text, chat, browse and shop online, just one-in-three of them have ever considered using that same device to avoid the banking hall altogether. Introducing these customers to alternative channels should be a top priority for Nigeria’s banks.
Ease of use is also a key challenge for Nigeria’s banks and this influences the willingness of customers to adopt web-based channels. As one – rather typical – Nigerian banking respondent told us, “My friends tell me it’s not easy to use so I’ve never really bothered. Besides, there’s too much hassle to sign up.” Our data reinforces this view: when it came to the use of the online channel, respondents reported the lowest levels of satisfaction for the ease of navigation and the visual design.
With recent media attention on cyber security risks such as cloning and identity theft on the rise, many Nigerian customers are also deeply concerned about the security of their transactions. As another survey respondent told us, “I do not trust the system, I’d rather go to the bank for the money to be transferred by the bank’s staff than do it myself as I would get the blame should anything go wrong.” So while many banks have introduced more robust security measures recently, they will need to continue to focus on assuring customers of the safety of their online channels.
We believe focus must be placed on three key areas:
- Improving the customer experience
- Reinvigorate and refresh the bank’s web assets to prioritize ease of use, navigation and visual design; aim to simplify the number of steps to complete a transaction or add more robust capabilities that respond to their customers’ technological sophistication.
- Introduce improved functionality targeted to specific customer segments such as corporate customers or SMEs who are particularly focused on security and the need for customized financial reporting and access to reliable, real-time financial data.
- Harness employees as channel ambassadors and customer experience experts; banks should be encouraging their own employees to use online banking and suggest opportunities for improvement.
- Reinforcing customer trust
- Enhance customer awareness and online literacy by promoting greater awareness of online security through the various online banking touch points; banks must assure customers that every precaution has been taken to ensure the security of their funds while also explaining the importance of keeping access details safe.
- Improve response time to fraud complaints; just 6 percent of survey respondents from Nigeria reported an experience of fraud but more than half of those said it took more than two weeks to resolve their case.
- Ensuring customer accessibility
- Provide 24 / 7 access to online platforms; focus on deploying the right monitoring tools to ensure 99 percent uptime on the online banking platform and allocate responsibility for uptime to specific staff members or teams.
- Review the costs and fees associated with online banking platforms to ensure that they are reasonable in comparison to alternative options; make sure that cost does not become a barrier to online banking.
While customer adoption of online channels may be slower than expected in Nigeria, it is also clear that momentum is already picking up. We believe that web-based banking will soon prove to be a lucrative brand booster for those banks able to iron out the kinks and educate customers about the convenience and security of online banking.
Written by Bode Abifarin, Senior Manager, Management Consulting, KPMG Nigeria