Convergence of technology, financial products pushing banks’ to limits, but…—VP
Though the 2018 Africa Investment Forum (AIF) in Cape Town, South Africa has come and gone, one of the critical takeaways remains the submissions of Vice President Yemi Osinbajo.
In his address during lead executive panel discussion, Prof Osinbajo stressed the need for banks in Nigeria and Africa at large to speed up service delivery reforms that will be tailored to stand the test of time coming from the convergence of technology and financial products powered by financial technology (Fintech) companies.
According to him, the digital reforms have become unavoidable to avoid being caught off-guard by rising innovations in financial technology as Fintechs have come to stay.
According to him, fintech, which is the new technology and innovation that aims to compete with traditional financial methods in the delivery of financial services, is disrupting the financial space to the extent several traditional banking practices are becoming obsolete.
Osinbajo averred that “Fintech companies, as you know, are challenging some of the old laws on banking and all of that. The major issue is that technology is clearly going to disrupt the financial space, and is doing so already, so banks have to reform.
“They have to invest in some of the fintech companies themselves, and they have to see this revolution as inevitable. I think what we are seeing today is the reform around that space, and many of the banks are looking up and understanding that this is going to happen, and it’s already happening.”
“I think the first thing is to allay the fears of the banks that their lunch isn’t being taken away. Banks, of course, are jittery about some of what is happening in the fintech space, but they need to be assured that this isn’t about taking away their lunch but that we cannot avoid what is coming to us now,” Osinbajo noted.
He further allayed the fears of the banks over the future of their services, pointing out that even though the quick convergence between technology and financial products was happening faster than many of the banks could cope with, relevant federal government agencies are on top of the forced paradigm shift in financial service sector.
Accordingly, he assured federal government’s resolve to assist banks in deepening integration of new financial technologies, revealing that “We have to change regulation and we must ensure that we give space to these tech companies because what is happening is that there is a quick convergence between technology and financial products, so much faster than many of the banks are able to cope with”.
“What we are trying to do is work with the banking system, like the Central Bank of Nigeria. For example, we are sitting with the fintech companies, banks, and the telcos. The telcos are in this space now and many of them are challenging some of what used to be traditional banking businesses,” Prof Osinbajo submitted.
