There is no doubt that the World is changing rapidly, with Internet and technology disrupting every sector of the economy.
The banking sector in Nigeria seems not ready to be left out as financial technology (FinTech) solutions are beginning to play an important role in the provision of financial service.
FinTech, according to Rotimi Adegbola, a FinTech expert, “is a portmanteau of financial technology that describes an emerging financial services sector in the 21st century”.
Originally, the term applied to technology applied to the back-end of established consumer and trade financial institutions. Since the end of the first decade of the 21st century, the term has expanded to include any technological innovation in the financial sector, including innovations in financial literacy and education, retail banking and investment.
The term financial technology can apply to any innovation in how people transact business, from the invention of digital money to double-entry bookkeeping. Since the internet revolution and the mobile internet revolution, however, financial technology has grown explosively, and FinTech, which originally referred to computer technology applied to the back office of banks or trading firms, now describes a broad variety of technological interventions into personal and commercial finance.
Though the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele recently made a comment that FinTech is a threat to the banking industry, but banks are not going to be left behind.
In spite of CBN’s claim, commercial banks are relying on the power of technology to service their customers. Even microfinance banks are also not left out in using technology to automate their service delivery. An example is Asha Microfinance Bank, which provides tablet devices to its loan officers to ease their process, reporting among others.
Despite being one of the oldest banks in Nigeria, Wema Bank was the first to introduce a fully digital bank — ALAT. More traditional banks are already investing in financial innovation and as far as putting self-service points powered by mobile technology within their physical branches.
United Bank for Africa (UBA) early in the year launched “Leo”, a specialised initiative aimed at putting the bank’s customers first with UBA continuously developing strategies aimed at easing transactions for the bank’s numerous users, while ensuring utmost safety of their transactions.
Mr. Austine Abolusoro, Group Head of Online Banking at UBA, said that Leo is not just a chat machine, but an artificial intelligence personality meant to address any type of banking concerns raised by customers.
Tosin Eniolorunda of TeamApt gave an affirmative response to the question of whether FinTech is a threat to the banking industry. However, despite being a threat, TeamApt collaborates with commercial banks. This has made it possible for the company not to bother about raising external funding.
“Looking at the FinTech and banking environment, I can project that in the next five years, there would be mergers eventually. Banks would probably acquire some FinTech companies that are real threats and some FinTech would become really great, working with banks.”
Going into a banking hall to have an issue resolved with a customer service representative can be a nightmare. Technological innovation is capable of offering a refreshing and satisfactory experience to consumers.
Customers want to be served cheaper, faster and easier, and FinTech solutions are making this possible. With Leo of United Bank for Africa (UBA) and Diamond Bank’s Ada, customers can open a bank account and initiate transactions from within the Facebook Messenger app.
FirsBank also recently unveiled its first digital lab in the country in the quest not to be left behind in the technological disruption.
Dr. Kazeem Adeduntan, Managing Director of the bank, said: “Technology is disrupting the entire financial market, especially the digital space. Our role as the oldest and the largest in the banking sector that has continuously reinvented itself is to ensure that we are at the forefront of disruptions in the industry.
“This is because if you don’t lead disruption, you stand the risk of being disrupted and that is what the launch of the lab is all about. It is to give that edge in the market, in the digital disruption space, not just in Nigeria but in all other locations where we operate. This is what we believe will take us to the next level because it is what is going on globally and it is central to our operations and business,” Adeduntan added.
According to MasterCard’s Country Director, Adebanjo Omokehinde , who also agreed that fintech is a threat, Fintech companies are here to stay and the banks are not going away either.
Adebanjo also claimed some banks run fintech solutions that are white label products.
According to her, MasterCard plays between FinTech and banks, by leveraging on the strength of all the parties involved.
The winner will be the company that makes financial services easier, faster and cheaper.