Financial and technology analysts say a single world currency is imminent given the growing technology disruption in the financial services industry typified by the popularity of blockchain adoption and its offshoots, cryptocurrencies.
Yele Okeremi, managing director and chief executive officer of Precise Financial Systems and Akinsope Roberts, lead, digital and robotics practice, Ernst &Young, Nigeria, gave the insight Thursday, April 26, 2018, in Lagos at the maiden business a.m./GTI Finance and Investment Dialogue.
Speaking to the topic, “Technology Disruption in the Financial Services Sector: How Prepared is the Nigerian Market?” both analysts say technology disruption has become the new normal, and that financial services industry would be impacted much more with traditional institutions losing market share to fintech start-ups.
Okeremi said the threat of losing control due to fear of deregulated banking service is why central bank governors are critical of cryptocurrency, adding that legislation would soon lose its grip on the payment system and be part of the drivers of disruption in financial services with positive consumer experience being the lever.
He cited how legislation has kept and trying to keep the hold on the technology that would clear cheques instantly in the country – either upcountry or local, and that Nigeria Interbank Settlement System (NIBSS) has in place a technology that would clear cheques instantly which has been delayed by legislation.
Okeremi, former head, Systems and Logistics, Ventura Savings and Loans Limited, said digital banking is the future of the banking industry, tracing the rise of fintechs to the realization by technology companies that they were getting low value from selling their services to the banks and decided to provide such services themselves.
Akinsope Roberts said over 35 percent of financial services revenue will be at risk by 2025, and that with about 31 million banked Nigerians, there is room for technology start-ups to bring more Nigerians to access
It is obvious that the traditional financial service providers are lagging behind in bringing the more than 150 million unbanked Nigerians into the financial system, which creates the opportunity for fintech to erode their market share, according to Roberts.
He noted that apart from technology, customer behaviour influenced by demographics is fast becoming a major disruptive driver.
“Nigeria’s population is young and young people want service on the go without being physically present at the providers’ offices and digital technology is providing the convergence for companies who can offer different services to meet their needs.
“Retail is the future for any commercial bank hence there is the need for banks to grow their technology so they can meet up with the new entrants and also know their customers more as fintechs now understand customers more than the banks, through monitoring of their data usage and are able to reach the people with services that they want,” he said.
He said trust which used to be the dominant issue in the banking sector some years ago was no longer the issue as research carried out by Ernst &Young indicates that 70 percent of respondents agreed that trust was no longer an issue and they would rather prefer providers that understand them.
He said that in as much as technology is the preferred platform to meet, understand and serve customers, there is the need for caution in adoption and deployment as it might be suicidal if financial service providers rush into launching any service without recourse to whether it is the right solution to their problems.
To survive in the disruptive economy, institutions need to put their customers first as their new products must be tailored to not only meet their needs but such products should be understood by the customers.
They must also ask themselves if their disruptive tendencies will lead to growth and if all the disruptive trends are important and relevant to them.
What are other like minds financial service providers doing? Is it going to enhance revenue? Is it empowering employees or is there an agreement between management and employees on how the products work?” he pointed out.