Analyzing the Impact of Digital Banking in Nigeria



The Banking sector has undergone significant transformations in recent years and one of the notable changes is the emergence of digital banking. Digital banking refers to the use of technology to offer financial services to customers without the need for a physical presence in banks to carry out financial transactions. This has made it possible to obtain financial services since the introduction of smartphones and the internet. This shift to digital banking has unquestionably benefited the masses, particularly in terms of convenience, accessibility, and cost savings.

Nigeria was recently named Africa’s digital payments leader, and the country’s banking sector is also the most digitized in the continent. According to a 2022 press release[1], Nigeria recorded 3.7 billion real-time payments in 2021, earning the sixth spot among countries with the biggest real-time payments markets.

Until the early 2000s, financial institutions relied on manual processes and paperwork to facilitate local and international transactions, no matter how complex they may be. However, Nigeria’s digital banking sector is expected to experience unprecedented growth in the coming years, as the government strengthens its drive to develop the country’s technological infrastructure[2].

This article seeks to discuss the impact of digital banking in Nigeria while providing recommendations on how to improve same.


Digital banking has been so beneficial since it came into existence. It has made the banking system easier to navigate and has also provided various means by which the banking system has favoured the majority. Digital banking has provided a more accessible means of financial transaction as opposed to traditional banking. The traditional banking model relied on physical branches and personal interactions between customers and bank employees. This model has been challenged by digital banks, which have no physical branches and rely on digital technologies to offer financial services. As a result, traditional banks have been forced to invest in digital technologies to keep up with the changing landscape. They have developed online and mobile banking platforms introduced new payment methods and implemented advanced security measures to protect customer data.


Digital banking has reduced the queuing system which was obtainable at the time traditional banking was the only means of performing financial transactions. Many people do not like to go to banks because of the crowd they would see there. Sometimes, you have to target a specific time to go to a bank, and it might clash with your usual schedule. However, digital banking eliminates this hassle and makes life easier.


Having control over your finances with the ability to self-serve is another significant benefit of digital banking, as is real-time access to manage and move money as you see fit, says Williamson… Unlike banking in person, mobile banking apps and websites generally have no restrictions on when you perform banking tasks, like depositing a check or moving money from one account to another. And it is getting easier to navigate daily transactions.


Digital banking has also enhanced the customer/banker relationship in so many ways.  Imagine noticing fraudulent activity with your bank account, and you are in a remote area with no access to the bank. You know that it is a deadly situation before more harm would be done before you can get through to the customer

service of the bank. Many non-digital banks entail that a customer physically visits the banking hall before talking to a customer service agent. With digital banks, you can place a call across or chat with them.


Digital banking has made it easier for people to make financial transactions at any time of the day. This is to say that transactions can be made [3]even at odd hours without the need to go to the bank. Where there is an urgent need and you have to make a transaction immediately, you can do it with digital banks irrespective of the time of the day. You do not need to waste time and go to the banking hall before it is possible. Digital banking makes transactions more comfortable and quicker.


Sometimes, opening a bank account could take hours or even days as a lot needs to be processed. Some banks may even give a specific amount required before the account can be created. However, it is not so with digital banks. You can open a digital bank account with no money, and it can be done from the comfort of your home[4].


Though, the importance of digital banking in Nigeria cannot be overstated, however, there is still a myriad of challenges faced in its implementation. Here are some of the negative effects of digital banking:

  1. CYBERSECURITY RISKS: Digital banking is vulnerable to cyber-attacks, which can lead to financial losses for customers. Hackers can compromise customers’ personal information, including bank account details, leading to financial fraud and identity theft.
  2. REDUCED PERSONAL INTERACTION: Digital banking eliminates personal interaction between customers and bank staff, which can lead to a lack of trust and loyalty. Customers may feel disconnected from their banks, leading to a lack of confidence in their banking services.
  3. LIMITED ACCESSIBILITY: Digital banking requires access to the internet, which is not available to everyone, particularly those in remote areas or low-income households. This means that some people may be excluded from accessing banking services.
  4. OVERDEPENDENCE ON TECHNOLOGY: Digital banking relies heavily on technology, which can fail or malfunction, leading to significant disruptions in banking services. This can be particularly challenging for customers who are not tech-savvy.
  5. LOSS OF JOBS: The adoption of digital banking has led to the closure of many bank branches, leading to job losses for bank employees. This can hurt the economy, particularly in areas with limited employment opportunities.
  6. DIGITAL DIVIDE: Adopting digital banking has created a digital divide between those with access to technology and those without access. This divide can exclude low-income households, older people, and individuals living in rural or remote areas from accessing Banking services. This can have a significant impact on financial inclusion and exacerbate inequalities.
  7. COMPLEX PROCESSES: Digital banking can be complex and confusing, particularly for individuals who are not tech-savvy. This can make it challenging for them to carry out banking transactions, leading to frustration and exclusion.
  8. INCREASED FINANCIAL RISKS: Digital banking can lead to increased financial risks for customers, particularly those unfamiliar with digital banking platforms. Customers may accidentally make incorrect transactions or fall victim to scams, leading to financial losses.


Although digital banking has come with lots of benefits that have undoubtedly turned the banking system around, we cannot overlook the various problems associated with digital banking. These problems if not tackled will continue to surface. Here are some of the possible recommendations to overcome these challenges;


A user-friendly interface is one of the most important features of creating any application, software, or website. It describes a hardware device or a software device that is easy to use.

A user-friendly interface is an essential component of digital banking. The design of the digital banking platform should be intuitive and straightforward, with clear instructions and prompts. It should be easy to navigate and understand, even for non-tech-savvy customers. The platform’s design should be consistent across all devices and responsive to different screen sizes.


Customer support is an act of providing timely, empathetic help that keeps customers’ needs at forefront of every transaction. Banks should provide adequate customer support to assist customers in case of technical problems or other issues. The support should be available through various channels such as phone, email, and live chat. The support team should be knowledgeable and responsive, providing timely solutions to customer issues.


Personalization is an act of tailoring an experience or communication based on information a company has learned from an individual. Banks can use customer data to offer personalized services to customers. Personalization can include offering customized product recommendations, personalized communication, and targeted marketing campaigns. Personalization can help banks build stronger customer relationships and improve customer loyalty.


Integrating with third-party services allows developers to benefit from a ready-made solution without having to develop their software for the same purpose. It allows banks to offer their customers a broader range of services beyond traditional banking services, such as investment, insurance, and bill payments.


Digital banking has come to stay with lots of changes which have benefited the nation at large. However, to ensure that digital banking is a step in the right direction, financial institutions must prioritize customer needs and provide robust security measures, user-friendly interfaces, and continuous innovation. Customers, on their part, must also take necessary precautions to protect themselves from cyber threats. With careful planning, implementation and education, digital banking can be a positive step for financial institutions and their customers. It is also imperative to critically look into the recommendations proffered to eradicate any challenges which the digital banking system is currently facing.


Digital banking, traditional banking, benefits of digital banking, functions of digital banking.

  1. 1> Accessed the 27th March, 2023.
  2. Guardian Nigeria “Digital Banking in Nigeria is on the rise in 2023”

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