Banking Is Changing, Mr. Emefiele

The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, speaking through his Deputy for Economic Policy, Mr. Joseph Nnanna, during the Chartered Institute of Bankers of Nigeria (CIBN) Investiture of Uche Olowu as its 20th President/Chairman Council in Lagos last week, said:
“Banking has a common threat. The enterprise risk posed by FinTech is real and there is need to be at the forefront of sensitising the banking sector about the real threats posed by FinTech.”
The rising influence of Financial Technology (FinTech) is, indeed, a clear and present threat to banking as we have known it. The growing application of technology in the delivery of financial services is a sign of the changing times. It is the new dawn for banking in Nigeria. Banking halls are getting less attractive to customers and huge transactions now happen outside those brick and mortar edifices, no thanks to the rising influence of FinTech which is taking financial services closer to the customers.
According to Nigeria Interbank Settlement System (NIBSS), which provides the infrastructure for automated processing, settlement of payments and fund transfer instructions between banks and card companies, banks-branch transactions have dropped by 25 per cent in the last one year, as more customers embrace electronic payment, especially Unstructured Supplementary Service Data (USSD) technology platforms. Digital platforms are taking businesses from, and chipping at the profitability of, banks. Secure online payments systems, mobile payments and transfer solutions are changing the ways payments for goods and services are made. As the emerging platforms are helping consumers to make payments, secure credits and satisfy customers’ thirst for speed and variety, they are leaving banks struggling to maintain control of the market space.
This trend is not likely to go into reverse any time soon.
Consequently, Mr. Emefiele, beyond asking the CIBN to see the movement of banking into cyberspace as a threat, should help them see it as a game-changer, with the potential to grow the industry for the benefit of its patrons. He should steer and assist the banks to focus on leveraging FinTech for the continuous improvement of the financial services business. In today’s banking, the options are severely limited. The astute banker needs not be told. Technology is moving the cheese. Only the banks that embrace FinTech as an opportunity, rather than a threat, will survive and thrive!