A leading global audit firm, PricewaterhouseCoopers (PwC), has called on the federal government and stakeholders in the Nigerian financial sub-sector to encourage initiatives that would stimulate the growth of the use of fintech’s ecosystem because of the positive roles it would play in the transformation of the Nigerian economy.
PwC in a report titled: “Changing Competitive Landscape: Fintech and the Banking Sector in Nigeria,” a copy which THISDAY obtained yesterday, said the government could do this by encouraging the synergy between commercial banks and fintech companies to create a mutually beneficial relationship between both parties, adding that “the playing field should be levelled for both fintechs and banks to compete or collaborate efficiently.”
The audit firm urged the government to create a unified regulatory system for coordinating the activities of the fintech and encourage investments in local fintech startups by simplifying the process of listing on the capital market.
“Meanwhile, the need to develop a robust regulatory structure for the fintech sector in Nigeria has become topical. Currently, the Central Bank of Nigeria (CBN) and the Nigeria Communication Commission (NCC) provide oversight for certain segments of the Fintech sector in the country, though ambiguities still exist in the extant laws, which need to be addressed,” PwC said.
The report assessed the changing competitive landscape and its impact on Nigeria’s banking sector.
It also evaluated the current trends in the banking sector in Nigeria, particularly in the area of fintech and digital banking.
The report also provided recommendations for traditional banks and fintech players on how to navigate the emerging trends and challenges that include COVID-19 and fintech.
It described the fintechs as companies disrupting the conventional banking model through the use of technologies that have made financial operations faster, easier and accessible to businesses, institutions and the public.
PwC said: “Fintech is a product of creative innovation that grants consumers access to financial transactions, such as banking, investments, risk and wealth management, payments, online trade and much more in the comfort of their homes, offices or while on the move, hence causing a continued competition between banks and fintech companies.”
It advised the fintech companies and banks to focus on strengthening their digital infrastructure platforms and systems now than they have ever done previously, adding that they should also tighten their internal governance frameworks and strategies on cybercrime mitigation.
“Financial service providers should also provide enhanced digital products as well as personalised services (digital and non-digital) that could provide significant returns on investments.
“With the advent of COVID-19 and its far reaching impact on the country’s business landscape, financial service providers need to make tough decisions regarding operational efficiency,” PwC added.
The audit firm also drew attention to the need for the government to institute reforms to offer tax breaks to young fintech companies.
The report recommended that stakeholders in the financial system should carry out engagement and capacity development programmes, which should accommodate the Small and Medium Enterprises (SMEs), micro-businesses, employees, trade group, employers, among others, to enlighten them on the benefits of using digital platforms as a channel for financial transactions and commerce.
It explained that “corporate entities in the financial service space must begin to re-align their business strategies to recognise the sweeping technological changes in the business environment,” and warned the financial service players on the “need to recognise the changes brought upon the sector as a result of the advent of COVID-19.”
PwC said the financial service industry had come under intense competition from fintech’s firms as governments and investors around the world showed interest in the fintech evolution given their ability to revolutionise how people save, borrow and spend money globally.
It stated that global fintech investments were more than $100 billion in 2018 “as investors stake their bets on the innovative platform of fintech business model, which is reducing operational costs and boosting profitability.”