Financial and technology experts have canvassed the need for banks and Financial Technology (FinTechs) entities in the country to explore areas of collaboration in their efforts to optimize their operations in the financial services sector and by implication, grow their businesses.
The experts, who spoke at the 2018 Finance Correspondents Association of Nigeria (FICAN) Annual Workshop at the weekend in Lagos, noted that innovativeness and strategic synergies were critical to creating a win-win situation for the players as none of the groups has all it takes to meet customers’ needs and expectation in the rapidly evolving financial services space.
In her paper delivered at the forum, a Faculty Member of the Lagos Business School (LBS), Dr. Olayinka David-West, pointed out that although FinTechs would not be able to displace banks in their competition for market share and provision of financial services to customers, hence the need for collaboration among them.
David-West, who was represented by Prof. Olawale Ajai, also a Faculty Member of the LBS, spoke on the theme ‘Banks, FinTechs and Nigeria’s Financial Inclusion Journey’.
Noting that banks that fail to innovate will lose market shares to the FinTechs, the analyst charged banks in the country to be more innovative in their competitive drives to capture more customers in the financial inclusion net.
According to her, available statistics on the financial services sector showed that 40 percent of adult Nigerians had bank accounts and just about 9.2 percent were using informal financial services as at 2017, only three percent of the account holders were using mobile money services.
David-West expatiated: “In practice, Financial Technology is not the exclusive domain of the FinTechs as more traditional banks, microfinance institutions and development organizations make use of financial technology.
“Banks and other financial services providers are important actors in scaling up FinTech solutions. Scale is important, both financially and digitally, to include the vast amount of people and companies at the bottom of the pyramid,” she said.
The expert also pointed out that financial services sector had witnessed digital entrepreneurship in the form of FinTechs due to the fact that they were highly innovative, inexpensive, entrepreneurial and passionate and have no defined guidelines/regulations.
David-West noted that there existed opportunities for banks and Fintechs to synergise their activities for mutual benefits because there are still millions of Nigerians not yet captured by banks in financial services delivery, adding that FinTechs can work with banks as facilitators to deliver financial services to the under-banked and the unbanked.
She clarified further: “All over the world, particularly in developing countries, technology can only go so far if you look deeply at the issue of access not translating to inclusion. Obviously, you want to increase the reach and the innovation that technology can provide, we will still have these issues.”
“FinTechs have provided useful services, not only in point of view of complementarities with the formal financial services. In terms of helping the sector delivers its traditional services more efficiently. Even in terms of innovations that allows for partnerships or greater interface between various players.
“They have introduced a budding platform for innovation for the banking and financial services by their disruptive effect on the industry. It is going to be a challenge to the banks not by way of being driven off of rendering banking services. They are not going to displace bankers, but they are going to displace some banks definitely”, David-West stressed.
In his comments during the Panel session, the Managing Director, Proshare, Femi Awoyemi, said that banks were beginning to see FinTechs more as partners than threats, adding that this is due to the complementarities of their roles in the financial system.
Specifically, he explained that FinTechs were supposed to provide digital financial services to the unbanked to help in closing the yawning gap in the nation’s financial inclusion space.
According to him, financial inclusion has declined by about 20 basis points since 2014 and this calls for increasing roles of banks and FinTechs.
Also at the session, a Deputy Director of the Central Bank of Nigeria (CBN), Taiwo Oladimeji said regulations for the FinTechs were issued by the apex bank, adding that based on the existing guidelines and rules the nation’s payment system remains one of the best globally.
