April 23, 2024

 

By Andy Nssien

Financial Technology (FinTech) companies will not displace banks in their competition for market share and provision of financial services to customers, Dr. Olayinka David-West of  Lagos Business School (LBS),  has said.

She spoke at the 2018 Finance Correspondents Association of Nigeria (FICAN) Annual Workshop help at the weekend in Lagos.

David-West, who was represented by Faculty Member, LBS, Prof. Olawale Ajai Ajai, spoke on the theme: ‘Banks, FinTechs and Nigeria’s Financial Inclusion Journey’ said banks that failed to innovate would, however, lose their market share to the FinTechs.

She said  banks needed to embrace innovation if they wanted to succeed. She stated that 40 per cent of adult Nigerians have bank accounts, while 9.2 per cent used informal financial services as at 2017. According to her, three per cent of the account holders used mobile money services.

David-West described FinTechs as small and innovative startup companies that develop financial technology and related products.

“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. Scaling is important, both financially and digitally, to include the vast amount of people and companies at the bottom of the pyramid,” she said.

She stated that the financial services sector had witnessed digital entrepreneurship in the form of FinTech, majorly because they were highly innovative, inexpensive startup skill set, very entrepreneurial and passionate and had no defined guidelines/regulations.

She said FinTechs could work with banks as facilitators to deliver financial services to the under-banked and the unbanked.

According to her, there were more Nigerians without bank accounts than those that have and it is important and a crying necessity to move more people into the financial ecosystem.

“ This is a national economic emergency. It is important something is done about it urgently,”  she added.

She stated 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, but in terms of helping the sector deliver 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,” she stated.

Also speaking, Managing Director, Proshare, Femi Awoyemi, said banks see FinTechs more as partners than threats. He said that FinTechs are supposed to provide digital financial services to the unbanked.

According to him, financial inclusion has been declining since 2014 and has widened about 20 basis points.

Central Bank of Nigeria (CBN) Deputy Director, Taiwo Oladimeji said regulation for the FinTech was done by the department, adding that Nigeria’s payment system remained one of the best.

 

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