Financial technology has helped to transform the financial services industry and economy at large in unimaginable ways and would continue to do so for many years to come. Any surprise why some banks are now breaking themselves up and transforming into holding companies, which will enable them become more proactive in preparation for the disruption ahead.
The competition in the financial services industry is certainly becoming more interesting as today’s urbane customers continue to desire only products that meet their unique needs. This need, coupled with the fact that users are being spoilt with multiple options in an ever-growing competitive market, has brought about more innovative solutions in the sector.
The assertion that we are in an epoch of short attention span is no longer news. As such, the existing fast-paced business nature which millennials refer to as the “new normal” has permeated every fabric of our existence not excluding the banking world. The evolution of technology has brought a total shift in banking operations. For example, help desks are no longer as crowded as they were in the past; also, various types of complaints are getting prompt resolutions.
Fintechs are leveraging technology to solve the challenge of access to financial services as well as a reduction in the number of the unbanked. The incorporation of technology into the financial sector, though not a foreign concept, made a groundbreaking entrance into the business arena just immediately after the global financial crisis of 2008. Thus, the advent of financial technology is a disruption to the conventional models of financial services and mode of transactions.
Going by the PWC 2017 FinTech Survey Report, over 62% of customers will use mobile applications to access financial services within the next 5 years. This projection is coming true as more people are warming up to the idea of digital money. FinTech has evolved to disrupt and reshape commerce, payments, investment, savings, assets management, insurance, clearance and settlement of securities, and even money itself with cryptocurrencies. People no longer have to stay in queues or carry heavy sums to conduct business transactions.
On the government side, we have witnessed a lot of improvements particularly with how SystemSpecs leveraged Remita, its 100 per cent locally developed platform to transform public institutions collections and payments. Today, thousands of accounts previous owned and operated by various government establishments have all shrunk to one account.
Fintechs are responsible for most of the current innovations we are experiencing in the Nigerian banking sector. Remittances and cash transactions have come easy for business as industry giants are stepping in to bridge the gap. Government levies are now seamlessly collated and processed online. Also, people can now access premium financial services right from the comfort of their homes. All of these demonstrates the impact of Fintech as it cuts across all spheres of human financial interactions.
The Nigerian payments landscape has significantly progressed over the past decade. To illustrate: the cost of integrating online payments to a website some years ago was over a hundred and fifty thousand Naira, but now, owing to fintechs, the cost of accepting online payments is zero. I remember paying similar fees on multiple occasions back in the days, yet I never got to successful carry out any integrations because it was so cumbersome and difficult and yet the monies were never refunded.
Furthermore, with the rise of smartphones, the behaviours of consumers have been massively changed. Whether they are paying for goods online or making bank transfers via a mobile app, Nigerians are now getting the hang of handling financial affairs as easily and conveniently as they operate their social media accounts. This creates a good opportunity for news startup businesses to spring up.
Technology has made it easier to transact businesses, save time, and enjoy unprecedented business efficiency. By enabling digital payments, mobile money reduces dependency on cash whilst providing a platform for customers to access a much broader range of financial services. It has affected the Nigerian financial space positively in a good number of ways. The following include areas fintech has heralded a positive transformation in public and private business sectors
It has fuelled the growth of alternative lenders which offer both higher yields to investors and faster, cheaper, more convenient loans to borrowers compared to traditional banks. Private lenders like PayLater, QuickCheck, and Lidya are continuing to invest hundreds of millions of naira into alternative-lending space in Nigeria making it easy for anyone to access quick loans on request. This enables individuals as well as SMEs to scale and grow their businesses.
Furthermore, fintechs are changing the way people manage money. Start-ups are introducing simple ways to manage and track finances. Instead of relying on a pen and paper or spreadsheet, people can now use digital financial solutions to manage their finances in real-time. Good examples of Nigerian start-ups playing in this space are PiggyBank for saving, Invoice.NG for invoicing and Kliqr for expense tracking.
One of the things going for the fintech industry is the satisfaction that users have, in the ease and seamless nature of carrying out financial transactions.
“We developed paylink.ng to address the needs of SMEs, who require an easy-to-use, personalised and memorable remittance system. This came at a crucial time when organisations are warming up to the need for a seamless payment system”, stressed John Obaro, Managing Director of SystemSpecs, developers of Remita and Paylink.ng
The rise of fintechs have paved the way for numerous possibilities for enterprises of various types. Currently, start-ups and SMEs now offer more services for a fraction of what they charged in the past. Other new technologies, like machine learning, artificial intelligence, predictive behavioural analytics, and data-driven marketing will erode guesswork from financial decisions as time goes on.
Let me end this piece by recognising the efforts of bodies such as FinTech Association of Nigeria (FintechNGR), FinTech1000 that have continued to champion the cause of financial technology amongst other important issues in the industry. There is indeed a lot more that is possible, so let’s look to the future with great optimism.
ICT Clinic by CFA is published weekly in the Sunday Punch