Edgar, this is a good overview of the state of banking in Nigeria. The traditional banks are resisting the reality that banking can not remain the way it used to be especially because of the entrance into the market by fintechs that are nimble like gazelles as opposed to being inflexible like an elephant. It should be noted that although, fintech can’t do investment banking like raising big-ticket funds for industries which still tend to be the forte of the big banks, other platforms such as equity finance and investment firms also known as venture capital firms have also moved into
the traditional market that could have sustained the old generation banks.
Those are the venture capital firms etc raising series 1,2 and 3 capital for firms like Flutterwave etc that are now unicorns-a billion dollars capital firm and therefore more capitalized than the major banks in Nigeria. It may be recalled that the likes of SoftBank had similar effects on traditional banking in the advanced society of the USA and Japan in Asia.
The downside of all of the developments in the financial services sector in Nigeria by new entrants of the likes of fintechs and capital /equity firms featuring angel investors even from offshore locations that are funding the likes of Jumia, Jiji, etc; is that they are exhibiting the characteristics associated with dot com firms in the 1990s. We all are aware of what became of them-they went burst just as we are witnessing the rise and fall of Bitcoin firms which had also eaten into the market of traditional banks. But they are also now tending to be going the way of dot coms that got bubbled up until they became burst.
In my view, the bank oligarchs as you tagged them are just resisting the acceptance of the fact that things are rapidly changing in the financial services sector and the huge profit that they have been amassing in the past few decades can’t be sustained in the face of the competition for customers with the new entrants that are less encumbered by huge overheads arising from being too top-heavy plus the high cost of having a massive number of branch offices at a colossal cost which is a burden that the new kids on the block are not carrying.
The first response by the old generation banks to the encroachment by the fintech and equity investment/venture capital firms is to evolve into Holding Companies. HOLDCO. Firstbank pioneered it , and Gtbank etc has toed that path too. With the humongous capital available to the big banks, l suspect that they too may be establishing subsidiaries to play in the fintech and equity investment sector.
It is only the banks that have resolved to remain stuck in their old practices as opposed to responding to the new dynamics of change that are still desperately sending their staff to seek deposits in an economy in the old ways and in an economy that is currently highly starved of funds to the extent that the CBN is using ways and means to keep the country afloat or downrightly printing money. Even the law authorizing the establishment of diaspora funds that president Buhari just signed into law is part of the many attempts to keep forex flowing from Nigerians in the diaspora into our country through remittances.
So things are still evolving in the financial services sector and the smart bankers and oligarchs are watching with keen interest. Therefore, your prognosis is great.
But I don’t share your sentiment that Titan bank would not fare well with its purchase of union bank. Titan just needs to follow the template set by tony Elumelu whose relatively small standard trust bank took over UBA that was in the same category of union bank as an old generation bank and has made a success of it .
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