Banks’ commission and fees are gradually going to financial technology (Fintech) firms. COLLINS NWEZE captures the steady rise and acceptance of Fintechs in the provision of financial services.
A 40-year-old engineer, Michael Ojo, was leaving home for work when his smartphone beeped with a familiar Facebook message alert. It was a reminder for him to send monthly allowance to his 70-year-old mother living in Ijebu Ode, Ogun State.
His wife, Victoria, had reminded him the previous night of the allowance and how badly his mother needed the money to pay her medical bills.
Three payment options came to his mind. The first was to pay through the internet banking platform of one of his banks. The others Quickteller or Paga network.
Few minutes later, he went for the Quickteller option. Quickteller and Paga are Financial Technology (Fintech) providing mobile money and digital payment services to consumers.
Fintech is the new technology and innovation that compete with traditional banking methods in the delivery of financial services especially at the retail banking segment.
As little as the N100 fee from the transaction seems, it represents one of the millions of revenue leakages facing commercial banks in this digital era.
Fintechs, such as Quick-teller, MoniDey, Baxi, PocketMoni, Unified Payments, Paga, Remitta and Cellulant, are part of the financial system offering services to the banked and unbanked.
Remita is supporting the implementation of the Treasury Single Account (TSA) and processes over $30 billion transactions yearly, and that’s just within Nigeria.
Any firm that can provide payment and collection services is a threat to banks and Fintechs are specialists at this. Fintech is an industry composed of companies that use new technology and innovation with available resources to compete in the marketplace of traditional financial institutions. They are also intermediaries in the delivery of financial services.
Fintechs are helping consumers in bill payments, retail payments, airtime purchases and use of Unstructured Supplementary Service Data (USSD) transactions. They also collect payment from spectrums of the population – whether banked or unbanked. With more options available to users of financial services, the competition on which platform to conduct transactions continues to widen.
Report from KPMG Nigeria says one-third of Nigeria’s population is below 24 years. The implication is that with a growing middle-class population, internet penetration and usage, which are the backbone of Fintechs, the sector is set to grow significantly.
KPMG survey shows that 77 per cent of Nigeria’s banking customers use social media for personal purposes. The problem is that Nigeria’s banks have failed to translate this passion for the internet and social media into increased adoption of internet and mobile banking solutions and that is what Fintechs are leveraging.
The Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, said the banking industry’s attractiveness is deteriorating and rivalry intensifying.
For him, transaction banking is being threatened and canibalised by leading Fintechs.
“Bank earnings will be more reflective of reality in the years ahead. Banks will jostle and partner Fintechs to mitigate erosion of transaction revenue and mobile payment transactions will be depleted by telcos. Fintech regulation will also tighten in most countries, including Nigeria,” Rewane said in the company’s emailed economic report.
Rewane said online transaction is the only thing that seems to matter to consumers. (The Nation)
