Fintech Focuses More on Payments, Not Wealth Creation—Ecobank

By Adedapo Adesanya

The Managing Director of Ecobank Nigeria Limited, Mr Patrick Akinwuntan, has challenged financial technology companies in the country to endeavour to create wealth for their customers.

The banker, while at the Fintech in Nigeria: State of Play, pointed out that the fintech industry was currently more active in payments than in wealth creation, which he said is the ultimate goal for financial inclusion.

He, therefore, called for greater collaboration among banks, telecommunication companies, fintech companies and respective regulators to stimulate the Nigerian economy and enhance savings and lending in the financial landscape.

According to Mr Akinwuntan, these will help to generate activities in the economy and expand wealth creation, stating that the Central Bank of Nigeria (CBN) has been proactive in providing a regulatory environment for the collaboration of players with an emphasis on customer protection which has improved customers’ trust in using digital channels.

Mr Akinwuntan who commended the role fintechs play in facilitating payment, said “there is need to deepen their presence in lending and savings. This is why I maintained that collaboration between Fintech and banks is valuable.

“We are not at the stage of competition yet; we are at a situation where although we have our profitability interests, we will actually gain much more by collaborating”.

He added that “in the area of savings and lending, be it to the agriculture sector, the creative sector or the young graduates setting out to be entrepreneurs directly, the ability to save even in little bits creates a profile that would be able to attract lending that you can translate into economic value.”

Specifically, the Ecobank Managing Director stated that the Fintech industry rose to the situation especially in the payment space and increase in lending and savings during the COVID-19 pandemic lockdown in the country.

He noted that “between March and April, the number of transactions in the payment space for Fintech grew in multiples of close to 800 per cent. We saw significant participation of the Fintech industry in actually reaching more of the underserved in the market by reducing the cost of access and making these services available all the time either by using traditional banks or in collaboration with government agencies.”

Further, Mr Akinwuntan explained that Ecobank had uninterrupted banking services for its customers through its digital platforms and agency banking during the lockdown.

“We had invested significantly in our digital platforms; given the nature of Ecobank as a pan African institution, the only way we could reach every household was to leverage the digital platform.

“We saw a marked growth in the number of digital-based transactions as our customers continued in their way of life depending on these platforms. And most importantly is the use of our social media to drive advocacy with the stay safe campaign where we educated the masses on safety guidelines. We were ready for the situation giving the nature of our franchise. And with our agency banking push, people do not need to go beyond their neighbourhood to do a transaction.”

Also speaking, Director, Payment System Management, CBN, Mr Musa Jimoh, said the apex bank’s regulation is driven by innovation.

“We have come up with regulations that will enable all the participants to behave symbiotically. Our payment system directive will be driven by innovation in the banks. We don’t know what will happen in the future in terms of technological development, therefore we follow innovations and prepare a ground for all the participants to work symbiotically. A new innovation is studied before we provide the needed intervention in terms of policy derivative that will help everybody to participate”.

He observed that the coronavirus pandemic-induced lockdown provided an opportunity for banks to sell digital products, test their back up and business continuity processes and explore the technological services available and push for their financial services, noting that CBN is backing up these areas with relevant regulations to ensure all the participants with the payment and financial service space can actually conduct their service responsibly.

On priorities in the regulatory space especially those championing Fintech, Mr Jimoh said the apex bank currently operates both sandbox and the open bank regulation.

“The sandbox provides a regulated environment for startups who don’t have the financial strength to take authorization from CBN to go through the entire process of licensing to test their innovation.

“We are working hard to showcase an environment where startups can come to the regulatory sandbox to test their innovation and services without having the license yet,” he added.

He said further that “open banking regulation is a principle that will allow third-party to leverage on the existing bank accounts with the banks to get information and provide services. More like democratizing financial services where a person chooses the service provider that will provide services and the kind of services provided. As a Fintech, you will be able to connect to banks to provide value-added services.”

Fintech in Nigeria: State of Play is an Economist Intelligence Unit Research which examines key trends in the fintech sector in Nigeria and assesses both industry drivers and impediments to further growth.