Advancements in technology are on the rise in Nigeria, particularly in the area of finance. Tech firms are gradually emerging to make life easier with their innovative services and offerings. And unlike traditional banks, fintechs feel less hassled by the need to follow old, sometimes unresponsive, business traditions. Nigerian banks too have understood that fintechs are more agile, and are now becoming smarter.
Who says banks and Fintech dont work well together? @paystack @DiamondBankNG working together to create great experiences @shollsman https://t.co/LmTrx7zYs9
— Uzoma Dozie (@Uzoma_Sparkle) September 21, 2017
More and more Nigerian banks are now willing to open up their systems and integrate more with fintech services. Banks have realised that fintechs have built and deployed innovative solutions that can are more flexible than those designed by banks. According to Mr Tunde Ogungbade, Managing Director of Global Accelerex:
…fintechs bring the IT agility and new business models, among other offerings to enable banks identify, grow and reach new markets or serve existing ones.
In areas like payment processing and loan processing, banks are technologically behind, and they know this. But rather than spend billions of naira developing individual solutions for their various services, banks are taking the wise route of outsourcing these expertise to fintechs.
For this reason, Diamond bank has formed a close relationship with Paystack. Since June 2017, for instance, Diamond bank, Zenith bank, GTB and a few others, partnered PayStack to provide support for the latter’s “Pay With Bank” solution”.
Thank you, Adeleye! And we definitely aim to integrate with all banks. Which bank would you like us to integrate with next?
— Paystack (@paystack) June 13, 2017
GTB (via internet banking)
— Ropsten Whale🐳 (@Adewagold) June 13, 2017
The “Pay With Bank” solution is a unique service that allows customers to make transactions without their debit cards. Customers key in their bank account number on Paystack and get an OTP sent to them that allows them complete their transaction. This solution is a big break from the existing system that requires customers to always have their debit cards with them. And interestingly, it seems like the closest interpretation of a cashless society and banks have been supportive of it.
Flutterwave, another payment processor has also been courted by a few banks too. It has been a payment processor for Access Bank since 2016. Also, unconfirmed reports say that Flutterwave and Zenith bank recently signed a partnership agreement. According to the report, Zenith bank is looking to outsource processing merchant payments to Flutterwave. This would allow for faster transactions on the Zenith bank system relying on the Flutterwave’s efficient system.
As Fintechs Grow, Banks Remain Important
Yet as much as banks seem to be conceding to the agility of fintechs, experts remind us that they can never be completely relegated. “Banks and other financial institutions need fintech companies and fintech companies cannot exist without banks,” says Mr Tunde Ogungbade.
🏴 : Is Mobile Money fueling Banking ? Different perspective between Ghana and Kenya.
🇫🇷 : Est-ce que le Mobile Money favorise la bancarisation ? Différente perspective vue du Kénya ou du Ghana
Cc @asemota pic.twitter.com/8t4XjBrchK
— Landry DJIMPE (@LanDjimpe) December 15, 2017
Mr James Agada, Managing Director of CWG also shared similar views. He expressed that when banks and fintechs work together, it would free banks from much technology and infrastructure spending and would help them refine their traditional banking services.
In the long run, it would be interesting to see how fintechs and banks cooperate in other areas.
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