Nigeria Technology and the Financial Services Industry
The financial services industry has seen radical technology led changes over the past few years. We’ve witnessed considerable innovations in the way and method of delivering banking transactions, payment methods and exchange mechanisms. Many executives have continually
looked to their IT departments to improve efficiency and facilitate game changing innovation – while somehow also lowering costs. Meanwhile, FinTech startups are encroaching upon established markets, leading with customer friendly solutions developed from the ground up and unencumbered by legacy systems. These disruptors are fast-moving companies, focused on a particular innovative technology or process in everything from mobile
payments to insurance. And, they have been attacking some of the most profitable elements of the
financial services value chain. This has been particularly damaging to the incumbents who have historically subsidised important but less profitable service offerings.
In our recent PwC Global FinTech Survey, industry respondents told us that a quarter of their business, or more, could be at risk of being lost to standalone FinTech companies within five years1 With technology finding its way into every aspect of our daily living, startups are currently
innovating better ways of moving money around the world and are coming up with payment solutions that have the potential of changing the way money is spent. Trends indicate that:
- Successful disruptors typically offer a better customer experience and greater convenience at a much lower price.
- The effects of disruptors vary significantly across countries and value chains, largely because of differences in regulatory barriers and the robustness of local FinTech ecosystems
- Regulatory authorities are caught between wanting to encourage competition and innovation and wanting to provide meaningful oversight of these disruptors.
Although online payments are yet to become mainstream and achieve at least a 50% adoption rate by internet users in Nigeria, there have been steps in this direction. Many financial tech startups have come from nowhere and have started treading in the murky waters including the likes of Paypal and Skrill2.
. Mention must be made of the likes of Etransact, Quickteller, Paga, Readycash, CashEnvoy and the others that have been brave enough to solve perhaps one of the most basic problems of business – trade. In this paper, we highlight key themes
that IT executives in the finance industry will need to address as they begin their strategic planning for the medium-to-longer term.