THE ROLE OF BANKS IN PROMOTING E-COMMERCE IN NIGERIA

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THE ROLE OF BANKS IN PROMOTING E-COMMERCE IN
NIGERIA
BY JIM OVIA GROUP MD/CEO ZENITH BANK PLC NIGERIA
INTERNET GROUP SEMINAR GOLDEN GATE RESTAURANT,
IKOYI, LAGOS Thursday May 22, 2008
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Outline

• Introduction
• E-commerce What?
• E-commerce Advent and Development
• Scope of E-commerce
• E-commerce and Banking in Nigeria
• Gains from E-commerce
• Going Forward
• E-commerce Success Stories
• E-commerce Challenges
• Conclusion

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Introduction

• A fundamental new rule for business is that the
  Internet changes everything. The Internet is
  becoming the town square for the global village
  of tomorrow
• Bill Gates
• Chairman, Microsoft Corporation

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Introduction

• Conduct of business has advanced from the trade
  by barter days through the commodity money era
  to a cashless or digital epoch referred to as
  electronic commerce (e-commerce)
• Advances in ICT and the emergence of the Internet
  have revolutionized business activities across
  the globe

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E-commerce What?
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E-commerce What?

• Electronic commerce (e-commerce) describes the
  process of buying, selling, transferring, or
  exchanging products, services, and/or information
  through computer networks, principally the
  Internet
• It is simply the act of sharing business
  information, maintaining business relation-
  ships, and conducting business transactions by
  means of electronic networks

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E-commerce Advent and development

• In the 1970s, e-commerce meant facilitation of
  commercial transactions electronically, using
  technology such as Electronic Data Interchange
  (EDI) and Electronic Funds Transfer (EFT)
• These allowed businesses to send commercial
  documents like purchase orders or invoices
  electronically

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E-commerce Advent and development

• In the 1980s, credit cards, automated teller
  machines (ATMs) and telephone banking became part
  of e-commerce
• From the 1990s onwards, enterprise resource
  planning systems (ERP), data mining and data
  warehousing became components of e-commerce

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Scope of E-commerce

• E-mail and messaging
• Documentation, spreadsheets, database
• Accounting and finance systems
• Orders and shipment information
• Enterprise and customer information reporting
• Domestic and international payment systems
• Advertising

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Scope of E-commerce
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E-commerce and Banking in Nigeria

• About a decade ago, Nigerian banks websites
  merely contained information about their services
• Today, banks service delivery are driven by ICT
  (e-commerce) and Nigerian banks now have
  transactional websites
• These websites now offer services such as account
  balance inquiry, funds transfer, etc

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E-commerce and Banking in Nigeria

• E-commerce has made banking easy and convenient
  from the comfort of the bedroom, from remote
  places with your computer or even mobile phone
• Identity verification is now easier, thereby
  reducing fraud
• E-commerce has made it possible for banks to
  handle large volume of transaction

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Number of Transactions on the Interswitch Network
Year Number of Transactions
2004 13.6 million
2008 (April) 54.9 million
Source Interswitch

• 303.7 Growth

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Total Number of POSs, ATMs and ATM Cards in
Nigeria
Year No. of POSs No. of ATMs No. of ATM Cards
2007 3,300 1,060 11 million
2008 8,000 4,939 21 million
Percentage Change 142.4 365.9 90.9
Source Interswitch
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Gains from E-commerce

• Convenience Banks websites and ATMs are open 24
  hours a day, 7 days a week in effect, banks no
  longer close
• Lower transaction costs
• Improved service to customers

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Gains from E-commerce
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Gains from E-commerce

• Expanded market
• Enhanced productivity
• E-commerce is breaking down the barrier of time,
  distance and space associated with conventional
  banking

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Going Forward

• Voice Pay Biometric payment scheme which
  enables people to authorize payment for online
  and cell phone-based purchases using only voice
• Multi-lingual ATMs For faster spread of cash
  dispensing technology to the hinterland to
  exploit opportunities provided by the huge
  population of semi-literates and illiterates

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Going Forward

• A new form of e-commerce which followed the
  rapid growth of wireless technology is mobile
  commerce (M-commerce) M-commerce is the buying
  and selling of goods using mobile telephones

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E-commerce Success Stories

• In the U.S. in 2007, total value of e-commerce
  sales was estimated at 136.4 bn
• E-commerce accounted for 3.4 of total retail
  sales in the U.S. in 2007
• Value of e-commerce transaction in China was
  127.5 bn in 2007
• Source US Department of Commerce
  www.chinadaily.com.cn

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E-commerce Success Stories
Selected Countries Value of E-commerce
Transactions, 2007
Country Value of Transactions (USBn)
United States 136.4
China 127.5
India 100
United Kingdom 78.6
Brazil 3.8
Nigeria 3.4
Source E-commerce Journal, U.S. Department of
Commerce www.computing.co.uk
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E-commerce Challenges

• Threat posed by Internet scammers (yahoo boys)
• Number of electronic networks linking merchants
  to banks and payment switch centres still
  inadequate
• The payment system is still predominantly
  cash-based
• Low tele-density (but impressive growth)

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E-commerce Challenges
Nigerias Tele-density
Year Tele-density
2001 0.73
2002 1.89
2004 8.50
2005 16.27
2006 24.18
2007 29.98
2008 (March) 32.79
Source NCC
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E-commerce Challenges
eBAY
eBay
Amazon
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E-commerce Challenges

• People still prefer cheque/cash transactions
  despite abuses and inherent risks
• Poor public perception of e-commerce due to
  illiteracy and ignorance
• Number of business outlets connected to payment
  switch centres is still grossly inadequate
• Incidence of fraud

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E-commerce Challenges

• Low internet penetration (8 million) out of a
  population of 140 million
• This a major challenge e-commerce cannot be
  maximised without access to the internet
• Lack of suitable legal framework and security
  instruments
• Poorly developed telecommunications
  infrastructure, especially beyond urban areas

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Conclusion

• Electronic commerce on the Internet will, before
  the end of the century, profoundly redefine many
  basics of business
• Peter Keen 
• U.S.  Prof. of Business Mgt/Consultant

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THANK YOU
www.zenithbank.com
in your best interest