Yesterday marked 59 years of Nigeria’s independence with some positive stories as well as numerous challenges waiting for solutions right from the British colonial administration, the banking system has gone through various stages of development, particularly with the advent of technology.
No doubt, the advent of technology in the financial services sector has opened up new markets and introduce new products, services and efficient delivery channels for the banking industry.
The Banking industry has evolved rapidly in the last decade. The country’s desire to enhance financial inclusion has made it compelling to leverage on technology to accelerate access to banking and other financial services.
Consequently, Nigerian banks have benefited immensely by adopting the latest technologies. Today, there is electronic banking, which has resulted in reducing the costs of transactions and has helped generate revenue through various channels.
Customers can carry out transactions seamlessly from the comfort of their homes and offices through various electronic banking channels such as Automated Teller Machines (ATMs), Point of Sales (POS), internet banking, Whatsapp banking, and mobile banking, among others.
More importantly, the industry has witnessed a reduction of queues in the banking halls to more personalized banking services.
Indeed, the traditional roles of banks are now being performed by various technology-enabled providers of services, usually referred to as Fintechs.
According to Sam Okojere, director, payments system department, Central Bank of Nigeria (CBN), Innovations in this industry are gradually changing the face of conventional banking as they provide more channels and ways of carrying out financial transactions. These are channels which can drive financial inclusion to meet the target set by National Financial Inclusion Strategy (NFIS) of 80 percent of bankable adults by 2020.
The CBN recently introduced into the financial system, a Payments service banks (PSBS), which are specialised banks established to promote financial inclusion and enhance access to financial services for low-income earners and unbanked segments of the society by leveraging on technology.
PSBS are expected to leverage on technology, mobile and digital services to drive financial inclusion, especially in rural areas where access to brick and mortar financial services is almost non-existent. PSBS is also being set up to focus on high volume but low-value transactions by low-income households and small businesses.
Uche Olowu, president/chairman of council, Charted Institute of Bankers of Nigeria (CIBN) said the increasing competition in the digitised banking environment would no longer be between banks but with nonbanking institutions. Fintech and big tech firms such as Google, Amazon, Facebook and Apple are now capturing more of the banking value chain.
Furthermore, payment service banking is set to further disrupt the banking industry. For example, as at July 2019, telcos such as MTN and Airtel Nigeria had been granted licences by the Central Bank of Nigeria. PWC suggests that from 2025-2035, a market economy would readily exist without traditional banks.
“We are investing and building our digital capabilities, and also actively seeking to collaborate with Fintech companies. Whether we compete or collaborate, we will be aggressively pursuing these digital opportunities to strengthen our traditional businesses, and going beyond being a bank to becoming a platform that enriches the lives of all the customers that it serves,” Segun Agbaje, managing director/CEO of Gtbank said in April 2017.