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
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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?
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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 relationships, and conducting business transactions
by means of electronic networks
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E-commerce – Advent and development
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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
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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 ecommerce
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Scope of E-commerce
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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
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About a decade ago, Nigerian banks’
websites merely contained information
about their services
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Today, banks’ service delivery are
driven by ICT (e-commerce); and
Nigerian banks now have transactional
websites
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These websites now offer services such
as account balance inquiry, funds
transfer, etc
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E-commerce and Banking in Nigeria
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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
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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
142.4%
365.9%
90.9%
Percentage Change
Source: Interswitch
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Gains from E-commerce
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Convenience: Banks’ websites and ATMs are
open 24 hours a day, 7 days a week – in
effect, banks no longer close
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Lower transaction costs
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Improved service to customers
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Gains from E-commerce
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Gains from E-commerce
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Expanded market
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Enhanced productivity
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E-commerce is breaking down the barrier of
time, distance and space associated with
conventional banking
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Going Forward
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Voice Pay – Biometric payment scheme
which enables people to authorize payment
for online and cell phone-based purchases
using only voice
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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
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A new form of e-commerce which
followed the rapid growth of wireless
technology is mobile commerce (Mcommerce); M-commerce is the buying
and selling of goods using mobile
telephones
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E-commerce: Success Stories
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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
$127.5 bn in 2007
Source: US Department of Commerce & www.chinadaily.com.cn
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E-commerce: Success Stories
Selected Countries’ Value of E-commerce Transactions, 2007
Country
Value of Transactions (US$’Bn)
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
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Threat posed by Internet scammers (yahoo boys)
Number of electronic networks linking merchants to
banks and payment switch centres still inadequate
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The payment system is still predominantly cash-based
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Low tele-density (but impressive growth)
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E-commerce: Challenges
Nigeria’s 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
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E-commerce: Challenges
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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
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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”
PeterKeen
U.S Prof. of Business Mgt/Consultant
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THANK YOU
www.zenithbank.com
…in your best interest
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