The Central Bank of Nigeria (CBN) on Wednesday said that digital revolution will be the focus of financial institutions in the coming months, making Fintechs a major driver of the industry.
Godwin Emefiele, governor of the CBN disclosed this on Wednesday at the ongoing seminar for finance correspondents and business editors in Enugu state.
“Technology continues to change the face of the financial services industry. The advent of digital financial services, for example, has created faster, more efficient, and typically cheaper transactions compared to traditional financial services. As the global economy recovers from COVID-19, it is obvious that FinTech will play a more important role towards resilient and sustainable recovery,” he said.
Represented by Edward Lametek, deputy governor, he said Over the past 14 years, the Nigerian payment system has evolved significantly with extensive technological development backed by deliberate enabling regulation by the CBN.
This has said has accelerated the development of novel financial products, services, and channels all of which have placed Nigeria at the fore of the financial innovation race.
The CBN Act 2007 empowers it to regulate the Payments System, while banks, the Nigeria Inter-Bank Settlement System (NIBSS), the Nigerian Exchange Group, payment service providers, and switching companies are the other major players in the system. The CBN, complemented by the Nigeria Deposit Insurance Corporation (NDIC) provides the necessary oversight function to ensure the efficiency and effectiveness of the payments system.
Emefiele noted that year 2007 marked a turning point in the country’s payments system terrain with the launch of the CBN’s Payment Systems Vision 2020 (PSV 2020), which identified series of recommendations to increase the resilience of the payment system infrastructure and work-streams to encourage the usage of electronic payment methods. Since then, the country has continued to introduce initiatives that would help simplify payments and deepen financial inclusion.
According to him, due to the lockdowns associated with the management of the Corona Virus (COVID-19) pandemic, financial traffic to digital platforms increased significantly in 2020.
“Indeed, the spread of the virus at the time accelerated the speed of digitalization of many sectors of the economy. Expectedly, discussions have increased around the issue of the digital economy just as more opportunities have come up for financial institutions and other players within the payment ecosystem to innovate and provide more efficient options for payments and settlements,” Emefiele said.
Studies have already shown that only 1 percent of FinTechs have been critically affected by COVID-19 and 2 percent severely affected. By comparison, around 17 percent of other high-growth companies fall into these categories. It is therefore unsurprising that many FinTechs have experienced a surge in demand as working practices and customer banking habits changed.
As a country with one of the largest millennial populations in the world- (an estimated 62 percent of the Nigerian population below 25 years of age), fast Smartphone growth driven by increasing affordability, Increasing mobile penetration, and fast transition to 5G technology, Nigeria remains primed to be an active playground for digital transformation and cannot afford to ignore the Fintech challenge, he said.