Retail banking, the next step for Nigerian lenders


“Most of the banks have traditionally focused on the commercial side of banking and with a new drive by CBN [Central Bank of Nigeria] in terms of financial inclusion and the changes to charges and commissions, the interest income for most banks have been hit,” Olumide Akindele, Head proposition & liability, Diamond Bank told CNBC Africa.

According to Akindele, this was what led to the low Capital Gains Tax (CGT) results that were released yesterday as it was only up by about eight per cent in terms of earnings.

“This is a very interesting time for consumers generally because it means that banks are now going to focus on a big area that they’ve neglected over the years,” he explained.


Whilst the balance sheets of many banks are still tilted towards corporate banking in terms of lending, as they begin lending to the retail sector, Akindele believes that they will see a stable, steady source of fee income in the long term.

“What you’ll begin to see is not just talking about the standard bank products but it’ll also look at other areas the bank can use to harvest a huge customer base. So, you’ll begin to see an area such as lifestyle benefits, more financial services orientated to serve most of these customers,” he added.

Nonetheless, the new strategy comes with heavy risks such as loan delinquency and they also have to invest in technology, training etc. Therefore, serious commitment from the banks is essential for the success of the strategy.

“Investment could be said to be very unlimited depending on where most banks are and how committed they are into this area. The thing is with retail, it’s a medium to long term strategy and it’s not a short term fix that will drive instant returns,” said Akindele.