Why your next bank is on your phone and you don’t Know it yet
So I watched a TedX talk yesterday on how fintech is shaping the future of banking and the speaker asked if the audience was enjoying their banking experience and the audience laughed and no one raised their hands I think.
And this reaction is the reason fintech exists in Nigeria. Recently we have seen a proliferation of fintechs. with the sector consuming a huge portion of investment that is coming into the tech sector.
Firstly, one thing they have brought is the democratization of investment. Now the lower and middle class have the chance to invest in Naira and Dollars assets such as Eurobonds, real estate, agriculture, stocks, treasury bills and mutual funds. It’s akin to when Prometheus stole fire from the gods and gave it to man.
Secondly it’s the no fee moment. So transactions such as NIP transfers, bill payment and cross border transfers that are billed by traditional banking institutions are offered for free even if the number of free transactions may be capped or not. And traditional banks are jumping on this movement. From GT bank that is eliminated fees on its youth account to Standard Chartered that is offering its savings account with no charges on NIP transfers with no cap on the number of free transfers, and no charges on withdrawal on other banks ATM.Thirdly these fintechs offer higher interest rates on savings and investment. Something only big firms and high net worth individuals got from traditional banks.
Fourthly, fintechs are more daring in being innovative from payment links that can be a solution to the current problematic NUBAN account structure where multiple individuals with different banks can have the same account number to the ability to trade and make payment with bitcoin, and dollar virtual cards that allow for true global payment on sites that reject Nigerian debit cards.
Fifth is the emergence of super apps such as Opay and Jumia Pay that not only offer wallet or savings account like traditional banking institutions but also the ability to hail bikes and cabs, book hotels, access discounts on products, read news, order food, subscribe to micro insurance, buy bus tickets and book hotels.
Lastly is the emphasis on financial literacy. So recently I attended one of the webinars on zoom where a lot of young people asked lot of questions on personal finance as it pertains their family and job and were given answers by young experienced folks who had answers to many of those questions. This is something I have never gotten from any traditional financial institution. And that is what makes the fintechs stand out.
They know we are now in an experience economy and they are beginning to own it. I don’t think the Chinese (Opay and PalmPay) would be here in Nigeria if the Nigerian fintech industry didn’t matter.
