According to PWC 2017 FinTech Survey Report, over 62% of customers will use mobile applications to access financial services within the next 5 years.
The word FinTech is a combination of the words “financial technology”. While the term has been around for several years, it seems that 2015 is really the year that this fledgling offshoot of the larger banking industry has finally come into its own.
But what is FinTech, and how is it impacting business growth in Nigeria?
What Is FinTech?
FinTech, or Financial Technology, refers to new technology or innovation that disrupts traditional ways of conducting financial transactions. This includes digitizing processes that were previously handled with paper money and human interaction.
The term financial technology can apply to any innovation in how people transact business, from the invention of digital money to double-entry bookkeeping.
FinTech is not new. It’s been around in one form or another virtually as long as financial services have. After the global financial crisis of 2008, FinTech has evolved to disrupt and reshape commerce, payments, investment, asset management, insurance, clearance and settlement of securities and even money itself with cryptocurrencies such as Bitcoin.
Key Areas Of Impact
The rise of the smartphone has massively changed the behavior of consumers. Whether it’s checking to pay for goods online or making bank transfer via a mobile app, Nigerians are now getting used to handling financial affairs as easily and conveniently as they do their email or Facebook page.
This is considered a good opportunity for news startup businesses and its the major reason for the disruption we are witnessing today.
FinTech is the major cause of all the recent disruptions we are experiencing in the Nigeria banking sector today (With the likes of ALAT by Wema Bank & GTBanks 737). Now you can access top-notch financial services without stepping into a bank.
Fintech uses technology in a better way to make people feel convenient living in the modern age. FinTech helps people who are ‘unbanked’ but a desire to buy or sell online have access to quick and affordable banking operations just by using a mobile phone.
The Nigerian payments landscape has significantly evolved over the past decade. The cost of integrating online payments to a website 5 years ago was over 150k now thanks to FinTech, the cost of accepting online payments is Zero.
With the rapid adaptation of card payments in Nigeria, platforms like Flutterwave and Paystack are playing the lead role in making it easy for businesses to start accepting online payments with the click of a button.
FinTech has fuelled the growth of alternative lenders which offer both higher yields to investors and faster, cheaper, more convenient loans for borrowers compared to traditional banks.
Private lenders like PayLater, QuickCheck, and Lidya are continuing to plow hundreds of millions of naira into alternative-lending space in Nigeria making it easy for anyone to access quick loans (business or personal) when needed.
4. Financial Management
FinTech is changing the way we manage our money for the better. FinTech startups are introducing simple ways to manage and track your finances.
Instead of relying on a pen and paper or spreadsheet, you can now use digital financial solutions to manage your finances in real time. Good examples of Nigerian startups playing in this space are PiggyBank for saving, Invoice NG for invoicing and Kliqr for expense management.
The rise of FinTech has opened up a world of possibilities for small businesses. Businesses can offer more services than ever and for a fraction of the price of what it would have cost before. Other new technologies, like machine learning, artificial intelligence, predictive behavioral analytics, and data-driven marketing, will take the guesswork and habit out of financial decisions.
Forward-thinking Entrepreneurs & Business Owners need to continuously keep up to date with FinTech developments as a vital part of their daily life. Being aware of the latest opportunities and developments within the field will only improve your business and help you stay at the forefront of your market.