The Central Bank of Nigeria’s drive to achieve 95 per cent financial inclusion by 2024 has fuelled the growing adoption and popularity of Financial Technology firms. This, coupled with the COVID-19 lockdown, which forced a shift in loyalty by dis-satisfied bank customers to fintech players leveraging innovative platforms to offer similar but accessible and lower cost-services, may have inadvertently set the stage for a fierce battle for market share between fintechs and banks.
It is easy to see why this is so. Total or partial lockdown and other containment measures to curb the spread of the COVID-19 bug forced banks to close some of their physical branches and operate limited physical services to eliminate the risks of transmittal through interactions within the bank.The result is the huge gathering of customers at bank premises across the country, particularly those in the city centres.
However, the changing competitive landscape, ostensibly in favour of fintechs, is hardly unexpected. With the preponderance of affordable smartphones and the rise of e-commerce in the country, many people now prefer to shop and make payments online using mobile phones. For instance, Internet penetration in Nigeria, according to the report, stood at 51 per cent in 2018, which was higher than the African average of 34 per cent. “This was partly due to the proliferation and adoption of cheap smartphones by mobile phone consumers. Currently, there are over 20 million smartphone users in the country,” the PwC report said.Also, Nigeria has about 200 million people, which is the largest in Africa.
The afore-mentioned attractive fundamentals, as well as CBN’s financial inclusion drive, are believed to be responsible for why, as at 2018, over 100 fintech firms were engaged in a broad range of product offerings spanning payment solutions, investment, online banking etc. It was also envisioned that the PSBs will facilitate high-volume low-value transactions in remittance services, micro-savings, and withdrawal services in a secured technology-driven environment to further deepen financial inclusion.
However, a banker with one of the banks dismissed such threats, noting, for instance, that in practice, Nigeria’s thriving fintech ecosystem is not the exclusive domain of fintechs.
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