Looking at the evolution of banking systems in Nigeria, it is clear there are specific services that banks in Nigeria are already offering, such as providing access to accounts and e-wallets. However, beyond creating accounts for customers, banks are often unable to effectively provide innovative value-adding solutions to customers because of a lack of technological expertise. This is exactly where fintechs fit in.
The connection between fintechs and banks is vital because banking customers, both retail and corporate, seek a range of services from their bank accounts. At any point in time a customer knows where their money is but what does that customer want to do with their money? They want to make payments to receive products and services provided to them conveniently, in the comfort of their own home. Similarly, corporate customers want to make multiple payments to multiple individuals, from multiple accounts, in multiple places efficiently and without any hassle.
Fintechs have the solutions that can enable individuals and corporates to transact globally from their bank accounts using multiple connections and access points from a single place.
For example, today if one has an account with a bank which is unable to make payments to a global e-commerce company, they have to rely on a third party that has built a relationship with a bank which can send money to that e- commerce company. These transactions have to be protected and safe, and banks play their role in this process. However, in terms of services that corporates and individuals want to access, it is the innovation that fintechs have introduced, which enables them to conduct multiple types of transactions. Innovative solutions developed by fintechs help customers aggregate all the funds that they have in multiple accounts and multiple places and see them all on a single platform. A fintech is only able to do that because it can integrate into multiple bank accounts and that is what makes open banking today. Today individuals and corporates are able to connect to their banks and easily access all information about their transactions.
This is where we can see value in terms of the connectivity or the relationship between fintechs and banks, which ultimately provides value for the end customer, whether it is an individual or organisation. First and foremost, a bank will have the primary assignment of creating or verifying an identity. However, rather than just facilitating normal debit and credit transactions that usually happen in a bank, there are so many transactional activities that happen today from those accounts which are only possible because of the intervention of fintechs.