The future of FinTech is bright, according to Accenture’s report, which found that investment in FinTech around the world has increased dramatically from $930 million in 2008 to more than $12 billion by early 2015.
The FinTechs employ Artificial Intelligence, Big Data and Machine Learning to glean the credit habits of customers from their mobile usage, and bank customers are gradually tilting towards the services of FinTechs.
According to Okere, the operators of FinTechs were becoming more innovative and at the same time, disruptive in their service offerings that seek to fill important niches in the credit markets.
“They enable people who have historically been shunned by banks to get loans in order to expand their businesses or to pay off credit card debt at low rates. International money transfers, which have long been a thorny issue for entrepreneurs, are getting easier as well. For smaller transactions, services like PayPal automatically convert currencies, so it’s easy for a customer to purchase goods from anywhere in the world,” Okere said.
Call for collaboration
The financial experts advised Nigerian banks never to feel threatened by the emergence of FinTech operators in the financial space, but to rather see them as technical partners in business and make haste to collaborate with them.
The financial experts were of the view that banks would lose greater percentage of their customers to FinTech, if they ignore collaboration.
They explained that customers taste and lifestyles were fast changing with technology evolution in such a manner that customers are seeking better technology solutions that will enable them carry out financial transactions from their mobile devices without going to the banking hall and without even opening a bank account. They said such solutions were currently being offered by FinTechs, and that the way forward is collaboration that will drive efficiency and sustainability.
Okere who spoke extensively during a panel session at the conference, said Fintech companies in emerging markets had shown that with the right technology, it is possible to leapfrog to new forms of banking.
“Truth be told, banks are best placed to continue to influence the future of financial services because of their huge branch network, solid reputations, and risk controls, as well as years of customer cultivation and loyalty, and they seem to have come to appreciate their own strengths. For instance JPMorgan’s $9.5 billion budget on technology, with $3 billion spent just on innovation according to their 2016 annual report is quite a significant pile. Banks however, have to radically change the ‘we win when you lose’ mindset,” Okere said.
Addressing the issue of regulation, Elegbe said technology should not be regulated for the sake of regulation. He, however, said that since people were involved in the use of technology to achieve certain goals, then those involved should get some forms of protection, and that is where regulation comes in.
“Regulation is not meant to stifle growth but there is need for regulation,” Okere insisted.
One of the Directors at the Central Bank of Nigeria (CBN), Musa Itopa, who represented the Director, Banking and Payments System Department at CBN, Dipo Fatokun, said: “The banking operation is gradually shifting from physical bank to banking services, driven by FinTech and the regulation has to change from what it used to be.” The essence of regulation, he said, was to maintain financial stability and ensure fair play between the banks and the FinTechs.