1. 1 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

2. 2 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

3. 3 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

4. 4 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

5. 5 E-commerce – What?

6. 6  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

7. 7 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

8. 8  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 E-commerce – Advent and development

9. 9 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

10. 10 Scope of E-commerce

11. 11 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

12. 12  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 E-commerce and Banking in Nigeria

13. 13 Number of Transactions on the Interswitch Network  303.7 % Growth YearNumber of Transactions 200413.6 million 2008 (April)54.9 million Source: Interswitch

14. 14 Total Number of POSs, ATMs and ATM Cards in Nigeria YearNo. of POSsNo. of ATMsNo. of ATM Cards 20073,3001,06011 million 20088,0004,93921 million Percentage Change142.4%365.9%90.9% Source: Interswitch

15. 15  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 Gains from E-commerce

16. 16 Gains from E-commerce

17. 17 Gains from E-commerce  Expanded market  Enhanced productivity  E-commerce is breaking down the barrier of time, distance and space associated with conventional banking

18. 18 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

19. 19  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 Going Forward

20. 20 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

21. 21 CountryValue of Transactions (US$’Bn) United States136.4 China127.5 India100 United Kingdom78.6 Brazil3.8 Nigeria3.4 Source: E-commerce Journal, U.S. Department of Commerce & www.computing.co.uk E-commerce: Success Stories Selected Countries’ Value of E-commerce Transactions, 2007

22. 22 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)

23. 23 YearTele-density 20010.73 20021.89 20048.50 200516.27 200624.18 200729.98 2008 (March)32.79 E-commerce: Challenges Nigeria’s Tele-density Source: NCC

24. 24 E-commerce: Challenges eBAY eBay Amazon

25. 25 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

26. 26 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

27. 27 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

28. 28 THANK YOU www.zenithbank.com …in your best interest