The FinTech Revolution

A banker by profession and a technology enthusiast in soul, there could possibly be no reason to keep me away from the Dot Finance Africa, held in Nairobi, Kenya in May 2016. The largest FinTech event in sub-Saharan Africa, the Dot Finance Africa is the common meeting place of technology vendors, financial institutions and disruptive startups to discuss how the technology and finance can be integrated to build a sustainable future for FinTech in Africa.

What is FinTech?

Let’s start by looking into the most basic question – What is FinTech?

FinTech is the short for Financial Technology – that is a line of business that makes use of software in order to deliver financial services. It is usually prevalent in the technology start-up segment that aims at disrupting financial systems that have little or less reliance on technology/software. Common examples of FinTech would include the likes of crowdfunding, foreign exchange and transfers, mobile money, robot financial advisors, peer-to-peer lending etc. To put it simply, FinTech is creating a world of alternative funding, and whether you are in the United States, London or Namibia, if it offers better value and convenience, customers will not hesitate to move.

How the FinTech Revolution has affected the Global Market

A couple of months back I had made a trip to China and earnestly believe that there’s a lot we can learn from the Chinese economy. But that being said, it also struck me how deep FinTech companies have penetrated into the Chinese markets as well, with some of the top Fintech companies having built an enviable customer base. So let’s safe to say, FinTech is everywhere.

So let’s talk about the FinTech Revolution in terms of numbers: A report from Accenture revealed some dramatic numbers in relation to global investments in FinTech, which stood at $12 billion in 2015. It’s therefore not incorrect to state FinTech has transformed the financial landscape globally and banks are definitely being affected by it. Considering that in the traditional scope, banks made money by lending, facilitating payments and remitting a fee for it, FinTech is making it possible for entrepreneurs to skip the hassle of visiting banks and look for money elsewhere.

Are Banks in Peril?

Well let’s just say that we cannot sit with our hands tied up, and even the biggest of banks can be affected if action is delayed. There are certain areas we definitely have edge over – for instance consumer banking. What affects consumers is the services and benefits they receive from the banking products. So whether they are investing in term deposits, seeking credit cards or a loan, most banks in Nigeria offer the same rates and terms and conditions. Of course at Diamond Bank we leverage from our expertise and services, but from a consumer’s perspective, there’s not much of a difference.

Where we are missing out on is our ability to give better rates, easy processes and value for money. Most FinTech companies are start-ups; they have low investments and overhead costs to bear, lesser regulations to follow etc. all of which makes it possible for them to offer better rates. Traditional banks miss out on that.

To conclude I believe collaboration is a must today. Banks have huge resources, customers and market value and needs to form strategic alliances with FinTech companies for shaping tomorrow’s market. They can use the technology that the disruptive startups have and can find a way to match the competition faced from technology giants like Amazon and Google who have their own offerings.

There’s a lot more that can be discussed about FinTech – and the revolutionary changes it has brought about. But let’s just save the detailed discussions for a later date!

Uzoma Dozie Blog on Nigerian Youth Written by:

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