Digital banking largely comprises of online banking and mobile banking. In this article, we explain the how and give details on all three forms of banking. We suggest you take a look at our previously published article *hyperlink digital banking in Nigeria on digital banking to get a full grasp of what you’re about to read.
Online Banking Definition
Online banking refers to banking services that are accessed through a browser, whether using a laptop, mobile phone, or some other digital device such as a tablet. Usually, these services are presented on a website belonging to a bank or financial institution.
A customer accesses this website through their browser application and goes ahead to perform transfers, check their account balance, or perform other functions.
Mobile Banking Definition
Mobile banking is in itself a form of online banking. The naming serves to describe the method of accessing an online banking service - which is a mobile phone.
The term mobile banking is sort of a buzzword for many reasons. One, Nigerians, especially the youthful population, are very fond of their mobile phones. These devices stand out compared to other mediums of accessing banking services, such as through a desktop or tablet.
With the advanced features and capabilities of smartphones, mobile devices are now as powerful as personal computers. They are also now more affordable and easy to carry around - making them a real preference as long as tech is concerned.
Features: Online Banking vs Mobile Banking
Curious to know how online banking differs from mobile banking? You’ll find answers in this section.
| Feature | Online Banking | Mobile Banking |
|—|—|—|
| Means of Access | Online banking is accessed through a website browser. The user can make use of a mobile phone, tablet, or personal computer for this. | Mobile banking strictly involves accessing banking services using a mobile phone. The user may make use of a website browser, although they typically download a bank application for this. |
| Ease of Access | Online banking is relatively easy to make use of since the service can be assessed using a browser on any internet-enabled device. Users do not need to have a bank app on their device.| Mobile banking is a little more difficult to access since it requires users to download a mobile application before usage. This is just another hindrance for users who are not tech-literate.|
| Cost to Users | Accessing banking services through a browser costs a small amount of browsing data and saves device resources such as storage space.| Mobile banking costs more compared to online banking since bank apps - like any other app - will take up storage space on a user’s device and also result in higher data usage. Users may resolve to buy cloud storage if their device storage is full.|
| Security| Online banking offers a considerable level of security. For example, a user may be required to input their banking ID and password before gaining access to the platform. Moreover, users may utilise antivirus and malware software on their laptops or desktops to provide additional security for banking. | Mobile banking offers considerably more security compared to online banking. Users can hide their banking app, or set up some form of authentication aside from the banking ID and password. Moreover, app sandboxing can be implemented, and the instant notification from banking apps serves to alert users to security issues.|
| Safety | Laptops and desktops are more stationary compared to mobile phones. This non-mobility factor increases safety for users who are accessing online banking services.| Mobile banking poses a risk of loss since a user’s mobile phone could get stolen or lost, compromising the safety of their bank accounts or banking operations.|
| Connection with External Accessories |Banking online using a desktop, for example, means that users can quickly and easily connect to accessories such as printers and fax machines.| Phones do not easily connect to or utilise printers, fax machines, and others. As such, mobile banking is less of an option especially when receipts, forms, and other types of paperwork are required.|
The Online and Mobile Banking Scene in Nigeria
As mentioned at the beginning of this article, online banking and mobile banking fall into digital banking. They can, therefore, be considered individually or as a group but we will address them distinctly.
Phones do not easily connect to or utilise printers, fax machines, and others. As such, mobile banking is less of an option especially when receipts, forms, and other types of paperwork are required.
Our analysis of online and mobile banking is based on E-payment Statistics data published on the CBN website. These statistics uncover the volume of transactions performed by Nigerians using several different e-payment channels.
CBN’s record shows that in 2022, a total of 14 billion internet (web) transfers were made - signifying online banking transactions. These transactions amounted to 783 trillion naira, representing 50% of all e-payments made that year. On the other hand, mobile app transfers within the same year numbered up to 1 billion, with a transaction value of only 111 trillion naira.
The previous year 2021 saw online payments reach a count of 10 million transactions. Both channels accounted for over 75% of the year’s e-payment statistics. Specifically, online banking stood out from mobile banking with values of 545 billion naira and 58 billion naira respectively.
Both the value and transaction count of online and mobile banking are striking.
First, a huge difference exists, with user preference pointing to online banking transfers over every other form of e-payment. Second, the amount of funds transferred using online banking channels skyrocketed from 545 billion naira in 2021 to 783 trillion naira in only twelve months.
Pros and Cons of Online Banking
Pros of Online Banking:
- Easy to access using an internet-enabled device and does not require any special applications.
- New features and services are readily added to online banking platforms by service providers.
- Does not utilise storage space on the user’s device.
Cons of Online Banking:
- May offer less security compared to mobile banking.
Pros and Cons of Mobile Banking
Pros of Mobile Banking:
- Increased security over online banking.
- Access to banking services almost anywhere and anytime due to the ease of carrying a mobile phone around.
Cons of Mobile Banking:
- It requires resources such as device space and tends to consume more browsing data.
- Users may not have access to new features and services until they update their app to the latest version.
- Consumes device resources such as CPU and storage space.
- Less device safety and therefore, a high risk of compromising user banking operations.
Conclusion
The current trend reveals that mobile banking is a convenient option when it comes to banking. However, it is online banking that is utilised for majority of local transactions. Nigerians appear to depend on it for transferring hefty amounts of funds.
You may wonder why this is so. We think it has to do with the usage of laptops or desktops by customers who make large value transactions. As simple as that.
Together, the financial ecosystem in our country is leaning towards the continuous adoption of new technologies and welcoming with open hands, the exciting world of digital banking. So you don’t have to be an online banking person or a mobile banking person alone: you can be both by utilising digital banking in all its forms.