KEY POINTS
1. Collaboration between banks and fintechs is key for growth.
2. Fintechs can reach underserved groups ignored by traditional banks.
3. Updated regulations are needed to handle fintech risks.
Nigeria can attain a $1 trillion economy by 2026 through collaboration between banks and fintech companies. According to the Nigeria Deposit Insurance Corporation (NDIC), collaboration is necessary to foster more convenient and available financing opportunities.
A shared vision for growth
The NDIC’s Managing Director, Bello Hassan, discussed this at a recent Finance Correspondents Association of Nigeria (FICAN) conference in Lagos. He emphasized that various attempts made by the Central Bank of Nigeria concerning recapitalization are crucial to building up Nigerian banks. Sufficiently funded banking institutions are in a position to manage shocks within the economic environment and facilitate national development.
But the actual opportunity, said Hassan, lies in the collaboration by banks with fintech: only through it would financing become easier for everyone, including small and medium enterprises (SMEs).
The key actors here are the fintech companies. Thus, whereas banks are usually concentrated on the big players, fintechs have the resources that allow targeting the unheard voices. They can therefore provide an easy-to-access and speedy monetary service that complements the existing marked banks. Hassan said that this way, banks and fintechs tried to ensure that as many businesses as possible receive the necessary financing.
Regulation and risks
He also said that there are additional risks associated with leaning more toward fintechs.
These risks are data risks, such as security risks, privacy risks, and risks concerning the protection of customers. Increased reliance on financial technology implies that these regulators must be more attentive and may likely have to update existing laws to help in solving these emerging hurdles.
Paving the way to $1 trillion
Nigeria has Africa’s largest fintech market, with a population of over 200 million people.
Measures such as the unification of foreign exchange rates by the Central Bank and the efforts to compel the banks to raise fresh capital are all towards stability. These efforts can enable Nigeria to achieve its $1 trillion economic vision by attracting more investors and increasing confidence.
This vision calls for cooperation with other persons, departments, or organizations, from commercial banks to internet-based firms and, of course, the government, that it is time to forge the country ahead to a productive future.
