FinTech to distrupt retail banking by 92% in Nigeria

• Operators need new strategy to stay afloat, says survey
• Expert seeks its partnership to drive financial inclusion

Nigeria’s retail banking and payments sectors will be the most disrupted by a group of new companies building financial technology (FinTech) solutions, according to the PricewaterhouseCoopers (PwC) Nigeria FinTech Survey 2017 report released in Lagos, at the weekend.

FinTech is an industry composed of companies that use new technology and innovation with available resources to compete in the marketplace of traditional financial institutions and intermediaries in the delivery of financial services.

The objective of the survey was to assess the rise of FinTech in Nigeria’s financial services industry, their potential impact on market players and the opportunities that may also exist following their adoption.

The survey claimed that retail banking and funds transfer have the highest likelihood of disruption at 92 per cent and 85 per cent respectively, noting that FinTechs are redrawing the competitive financial services landscape and blurring the lines that define players in the sector.

“Their offerings range from competing financial services such as alternative lending, to additive solutions atop existing banking services, to enabling technologies for the banks themselves. Capitalising on the latest mobile, cloud and digital technologies, Nigeria is increasingly becoming home to many FinTech firms who are trying to shake up and be secretive to the banking value chain,” PwC stated.

The PwC survey also revealed that Nigerian financial services players see changing customer needs as the top impact FinTechs have on their business, with up to 60 per cent of respondents indicating that up to 40 per cent of financial services business will be at risk of standalone FinTechs by 2020.

Already, an expert has asked banks to partner FinTechs in the drive towards deepening financial inclusion. Speaking ahead of the March edition of the monthly Ennovators Breakfast Series (EBS), in Lagos, which will examine “if the banks and FinTechs are friends or foes”, the Chief Executive Officer, eMaginations, Sola Fanowopo, organisers of the programme, said Nigeria is not an exception in the FinTech upsurge.

He said the global investment in FinTech is reported to have reached as high as $80 billion between 2010 and 2016. While the threat of disruption is quite appreciated, respondents also noted that the FinTech adoption will enable the unlocking of opportunities for more revenue sources and reduce operational cost.

Advisory Partner and Chief Economist, PwC Nigeria, Dr. Andrew S. Nevin, said: “FinTechs are empowering customers by providing services that are delivered via technology applications on customer’s mobile devices. This allows consumers conveniently initiate and complete transactions, connect to third party entities and access information without restrictions.

“All over the world, the increasing momentum of FinTechs and their success is challenging financial services players to devise a spectrum of strategic responses. However, not all FinTechs pose the same threats or opportunities. In some cases, FinTechs will be viewed as enablers to traditional innovation and continuous improvement.

To the Associate Director and Co-FS Advisory lead at PwC Nigeria, Adedoyin Amosun, although more than half of respondents recognised the importance of blockchain, they are yet to articulate a business response to this trend.

Banks and Funds transfer and payments players are the most familiar with the blockchain trend perhaps this is linked to the sectors in which we have the most use cases to date.

Amosun, while presenting the key findings of the survey, said noted that although more than half of respondents recognised the importance of blockchain, they are yet to articulate a business response to this trend.

Banks and Funds transfer and payments players are the most familiar with the blockchain trend perhaps this is linked to the sectors in which we have the most use cases to date.