FinTech, Bitcoin seen as drivers of banking sector

The growing interest among stakeholders in the financial services sector, in Financial Technology (FinTech) and use of Bitcoins, among others are seen as major drivers of the banking sector, analysts say.

FinTech is an industry that uses technology for financial transactions and makes financial services seamless and more efficient. Some of the FinTech services are Peer-to-Peer lending, Digital Insurance, Digital Banking, Online Stock trading, Crowdfunding and CrowdInvesting, among others.

However, a new PricewaterhouseCoopers’s survey on the rise of new technologies in the financial services sector and their impact on market players says that about 25 percent of Nigerian bank’s market share may be at risk due to the increasing usage of the technology, an advice that calls for effective monitoring by the regulatory authorities.

The report reveals that 83 percent of respondents from traditional financial services (FS) firms believe part of their business is at risk of being lost to standalone Fintech companies, while a staggering 95 percent of bank respondents believe so.

Global investment in FinTech ventures tripled to $12.21 billion in 2014, clearly signifying that the digital revolution has arrived in the financial services sector, according to Accenture.

Most deposit money banks are already integrating Fintech into their operations, with the aim of capturing larger share of the online market.

Also, the rising interest in Bitcoin, digital money, shows that it is one of the factors that would drive the banking industry this year.

The Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) have set up a committee to study this trending innovative financial product.

“Another phenomenon emerging in the banking and financial landscape, is the emergence of what is known as bitcoin. I understand that a lot of people have started to patronize bitcoin”,Umaru Ibrahim, managing director/CEO, NDIC, said in Kaduna, December 21, 2016.

In his emailed response to BusinessDay, Taiwo Oyedele, PwC head of tax and regulatory services West Africa Tax Leader, said in 2017, the events that will drive the sector are likely to be similar to those of 2016.

In addition, he said FinTech and other disruptive events such as the use of Bit coins will start to have impacts on the banking sector which will necessitate that players in the industry rethink how they do banking in order to remain relevant and ensure sustainability.

Steve Davies, EMEA FinTech Leader at PwC had said “FinTech is changing the FS industry from the outside. PwC estimates within the next 3-5 years, cumulative investment in FinTech globally could well exceed $150bn.”