A robust partnership between banks and the emerging Fintechs industry has been identified as a sure way to drive financial inclusion in Nigeria. This view was expressed by Faculty Member, Lagos Business School, Dr. Olayinka David-West, at the 2018 Annual Conference of the Financial Correspondents Association of Nigeria (FICAN) held in Lagos at the weekend.
In her presentation titled “Banks, Fintechs and Nigeria’s Financial Inclusion Journey”, David-West asserted that partnership between the two industries in Nigeria’s financial sector is the best way to drive the much desired growth in the economy of Nigeria.
She pointed out that the largest economy in Africa is almost missing out in the opportunity to drive financial inclusion in line with the current global trends.
“Nigeria does not have all the time to wait as it is already missing out in the opportunity to develop”, she said.
Citing statistics from the World Bank Global Findex, which she says calls for urgent need to drive financial inclusion in Nigeria through the partnership of banks and Fintechs, David-West, who was ably represented by Professor Olawale Ajayi of the Lagos Business School, disclosed that only 40 percent of adult Nigerians have bank accounts as at 2017.
Further driving home her argument for a need for partnership, she made a reference to another data supplied by Intermedia, which showed that only 9.2 percent of Nigerians patronized the informal financial services in 2017.
“Three percent used mobile money services in 2017. Moving the bulk of potential customers outside the financial services sector into the sector will catalyse the growth of the economy, and it must be done very urgently”, she added.
Whilst other experts at the event which include representatives from the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), Commercial Banks and other stakeholders in the financial sector in Nigeria dismissed any threat from Fintechs to the banks, David-West warned that banks can no longer continue to shun digitalization of their operations if they must continue to remain business in the long run.
Whilst it was acknowledged that in practice, financial technology is not the exclusive domain of Fintechs as more traditional banks, Microfinance Finance Institutions (MFIs) and Development Organisations make use of financial technology, David-West warned that banks which fail to quickly embrace technology to drive financial inclusion will soon be overrun by the highly innovative Fintechs.
According to the don, the financial services sector has witnessed digital entrepreneurship in the form of Fintechs because of innovation, inexpensive startup skillset coupled with their entrepreneurial and passionate drive.
Besides identifying entrepreneurship and innovation as possible threats to the partnership between Fintechs and Banks, globalization is another major obstacle that banks will have to deal with if they must catch up with Fintechs which have already embraced the concept.
“It would mean that banks can’t remain in their comfort zones and play small in their little corner. Even the regulators must retool to play an effective role in the face of growing technological practices in the financial sector”, she said.
Meanwhile, the desired partnership, if achieved, will go a very long way to enhance growth and economic development in Nigeria as jobs will be created through financial inclusion.
“The 500,000 agents which will emerge from the partnership between banks and Fintechs, plays down the threat of job losses as feared by some Nigerians. The economy will become more robust as more money comes into the system through the activities of Agents. It is expected that this will create more jobs in the long run and make the economy more robust”, panelists at the event alluded.
However, the panelists warned that “Armchair banking is no longer permitted. They must become innovative. Younger people are needed in the banks now to analyse data which the banks must leverage upon”.
The critical role of government to achieve financial inclusion in Nigeria as identified by the Conference include provision of infrastructure, the foremost being power supply. Enabling policy and regulatory support as well as providing security and curbing criminality are other responsibilities expected from government. Communicating with customers in their respective languages as well as ensuring customer focus and protection are some of the things expected by financial sector operators to put in place to drive financial inclusion.