Why Standard Chartered Excluded Nigeria From Its New Digital-Only Retail Banking

Standard Chartered Bank is the latest bank to catch the digital banking fever. The UK bank has announced the rollout of its digital only retail bank in Africa.

Standard Chartered Bank Unveils its Second Wave of Digital Retail Banks in Africa https://t.co/s2Y19PftLe pic.twitter.com/zbnlbC5AtU

— Annews24 (@AfricanewsT) February 1, 2019

French-speaking West Africa country, Ivory Coast was the first to get the digital banking experience when Standard Chartered first rolled out its digital banking innovation last year.

But now, Standard Chartered has announced that its digital bank will be available in four other African countries. They include Uganda, Ghana, Kenya and Tanzania. The retail only digital bank is billed to be introduced into these countries by the end of the first quarter of 2019.

However, the selection of these countries raises one important question: Why was Nigeria not considered or it?

Why Was Nigeria Excluded?

At the risk of sounding like a big cry baby, Nigeria should be the number one market for this sort of product. With a population of over 180 million and being Africa’s largest economy, it just doesn’t make sense that Nigeria is left out.

Standard Chartered excludes Nigeria in digital-only retail banks rollout – https://t.co/H0pdMRIcEG pic.twitter.com/cXjd19hT1Q

— ITPulse (@ITPulse_News) January 31, 2019

But one reason may explain this: As of now, the Nigerian economy is a bad market for digital innovations.

Despite the superb growth of startups and digital innovations recorded in Nigeria recently, digital operations still struggle in Nigeria.

In 2018, Efritin, a classified listing website, quit Nigeria shockingly. Then Konga, one of the country’s leading e-commerce platforms, got devalued for less than a tenth of its original valuation. The struggling company was sold to Zinox for a reported $10 million. OLX, the biggest classifieds listing website also ended physical operations in Nigeria.

@wemabank @alat_ng I reported an issue of multiple failed USSD airtime recharge attempts on the 26th of January, it was acknowledged on the 28th and I received a mail saying the resolution status would be communicated in 48 hours. This is the 8th day, and still no word from you

— Nelson (@blvckcoder) February 4, 2019

Even ALAT the country’s biggest digital bank is struggling these days. After a brief period of growth between 2017 and 2018, the app is drawing a lot of negative reviews recently.

Looking at these examples, it isn’t hard to decipher that Nigeria is not quite a stable digital market presently. This perhaps explains why Standard Chartered excluded Nigeria from its target market?

Is Nigeria Really That Bad?

Yet beyond these, Nigeria is not as bad as she appears. For one thing, there are actually very few challenges to digital banking in Nigeria. There are few regulatory problems in the country and the obvious problem of identity verification has been fairly covered thanks to BVN verification.

Also, Uganda, Tanzania and Ghana each possess similar banking cultures and practices as Nigeria. As a matter of fact, some of Ghana’s biggest banks are atcually Nigerian.

Nevertheless, another possible explanation why Standard Chartered excluded Nigeria could be due to the bank’s own limited exposure in Nigeria.

Standard Chartered is not Popular in Nigeria

Standard Chartered, as it is now, entered the Nigerian market in 1999. But after 20 years in the country, the bank has only 35 branches. Its operation is largely restricted to Lagos, Abuja and Port Harcourt. The bank is largely focused on corporate financing and even its commercial banking team became based in Nigeria for the first time in 2015.

So from all angles, Standard Chartered is too unknown in Nigeria to successfully pull off digital banking. This could explain why Nigeria is not yet on its cards.

However, the bank hasn’t ruled out Nigeria completely. Standard Chartered Bank considers Nigeria a growth market. Plus, the roll out of the digital bank is in stages. Perhaps in quarter two, it may consider Nigeria.