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Repositioning Financial Services for Digital Transactions

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  • Repositioning Financial Services for Digital Transactions

Digitalisation is driving disruption and re-shaping the future across payments, banking, trade and commerce, consumer and retail industries, healthcare and other industries, leading to convergence and collocation within some sectors.

The increasingly converging and interconnected sectors are rapidly adapting to new market realities and a landscape that is rapidly being redefined and dominated by FinTech disruptors.

Data, for example, is essentially becoming a competitive weapon in the hands of discerning players, and more than ever before, collaboration is increasingly becoming the key to survival.

Based on the increasing rate at which convergence is taking place, occasioned by the increasing rate of financial technology (FinTech) disruptions, Interswitch, a digital payment solution company, has initiated a lofty idea to host a two-day Interswitch Connect Tech/Payment conference in Lagos, from 14th to 15th of September 2017, designed to bring together, the entire digital financial ecosystem to discuss, debate and evaluate the future of digital transactions, amid threats from FinTech disruptors.

Disruptions in the digital space

New technologies emanating from FinTech companies are fast changing the old ways of digital payment, thus causing healthy and unhealthy transactions in the financial ecosystem, which many players see as threat to digital transactions.

FinTech is an industry composed of companies that use new technology and innovation with available resources to compete in the marketplace of traditional financial institutions and intermediaries in the delivery of financial services.

Over the time, their technology solutions have been embraced and adopted by some players in the financial ecosystem, while some players still see some of the solutions as big threat to digital transaction.
A recent survey report released by PricewaterhouseCoopers (PwC), raised deep concerns over possible disruption of Nigeria’s financial service sector by the FinTech players.

According to the report, the Nigerian retail banking and payments sectors would be the most disrupted by a group of new companies building financial technology solutions.

The PwC survey, which was conducted around 50 Chief Executive Officers (CEOs), and industry leaders across various segments of Nigeria’s financial services industry with additional insights and proprietary data obtained from DeNovo, PwC’s Strategy and Platform, focused on the FinTech innovation. The report concluded that FinTech solutions could cause a great deal of disruption in the country’s financial services market.

According to the report, FinTechs are redrawing the competitive financial services landscape and blurring the lines that define players in the sector. Their offerings range from competing financial services such as alternative lending, to additive solutions atop existing banking services, to enabling technologies for the banks themselves.
“Capitalising on the latest mobile, cloud and digital technologies, Nigeria is increasingly becoming home to many FinTech firms that are trying to shake up the banking value chain,” the report said.

Findings from the survey by PwC also revealed that Nigerian financial services players see changing customer needs as the top impact FinTechs have on their business, with up to 60 per cent of respondents indicating that up to 40 per cent of financial services business will be at risk of standalone FinTechs by 2020.

Presenting the report in Lagos, Associate Director and Co-FS Advisory Lead at PwC Nigeria, Adedoyin Amosun, said: “From our survey, retail banking and funds transfer have the highest likelihood of disruption at 92 per cent and 85 per cent respectively. Underwriters were of the view that insurance brokerage, Auto and Life insurance stand an equally high likelihood of disruption at 77 per cent. While the threats of disruption is quite appreciated, our respondents also noted the opportunities FinTech adoption will bring especially as seen in the unlocking of opportunities for more revenue sources and reduce operational cost. A sizeable number also believe that Fintech adoption will improve customer retention and product differentiation.”

The threat

According to Amosun, majority of respondents from traditional financial industry players believed that part of their business is at risk of being lost to standalone FinTechs, up to 92 per cent in the case of banks. Also banks ranked loss of market share at the top FinTech related threat, closely followed by increased pressure on margins. One of the ways in which FinTechs are able to do this is by significantly shrinking operating costs. Other FS incumbents ranked information security and privacy concerns as the key FinTech threat to their business.

Analysing the survey report, Advisory Partner and Chief Economist, PwC Nigeria, Dr. Andrew Nevin, said: “FinTechs are empowering customers by providing services that are delivered via technology applications on customer’s mobile devices. This allows consumers conveniently initiate and complete transactions, connect to third party entities and access information without restrictions.”

All over the world, the increasing momentum of FinTechs and their success is challenging financial services players to devise a spectrum of strategic responses. However, not all FinTechs pose the same threats or offer opportunities.

“In some cases, FinTechs will be viewed as enablers to traditional innovation and continuous improvement. In others, it presents a series of disruptions and threats as they continue to make inroads into banks’ traditional territory by offering a competitive service or product,” Nevin said.

Taming threats with Interswitch Connect

Some experts have suggested that implementation of a customer-centric model focused on offering products and services that truly addresses customer’s needs and supports the completion of transactions through multiple accessible and connected channels, will be ideal to address concerns of those who feel threatened by FinTech solutions.

Many experts are of the view that financial players must have to proactively approach the FinTech challenge with a clearly articulated strategy rather than the current approach of adopting reactionary measures.

“Incumbents also need to identify the threats and opportunities that are most relevant to their business and explore ways they can build, acquire or partner with FinTechs for the capabilities they lack,” they said.

In the midst of the confusion, the organisers of Interswitch Connect have said the conference will discuss various strategies that will rest the fears of most financial players, as they relate to FinTech disruptions.

According to the organisers, the two days conference would feature keynote presentations, panel discussions, breakout workshops, case study presentations and product demos from the leading innovators and Original Equipment Manufacturers (OEMs) in the financial services industry, culminating in the Interswitch Connect Gala night where people would unwind, network and recognise key partners and clients.

The conference promises to be the first of its kind and will incorporate thought leadership within the ambits of the payments/fintech space with the keynote delivered by futurist and award winning author, Brett King.

The scope of the conference will be extended to include top OEM partners such as Thales, ACI, Stratus & Finastra and other knowledge partners such as PwC, MISYS, Kantar TNS, as well as Ecosystem partners including AfreximBank and TRANSSION Holdings. OEM Partners will also have an opportunity to present their solutions to the target audience.

Budding FinTech ecosystem

Some experts are of the opinion that FinTech should be groomed to provide financial services that will bring about healthy disruptions in the financial ecosystem, in order for it to gain traction and potentially locate Nigeria on the global map

as a FinTech hub. They are equally calling for collaboration between FinTech companies and the financial institutions, that will bring about the right mix of technical skills, capital investments, government incentives, regulatory framework and an entrepreneurial and innovative mind-set, as the catalyst needed to establish FinTech as a key enabler of financial services in Nigeria.

The past three years have been formative for the Nigerian FinTech sector and saw the emergence of numerous FinTech start-ups, incubators and investments.

Building a strong FinTech ecosystem where startup will engage in external partnerships with financial institutions, universities, research institutions, technology experts and government institutions is expected to facilitate growth and innovation in the FinTech sector, according to expert views.

The plan to hold the Interswitch Connect conference, will help address all grey areas and fears envisaged by financial players, as regards the perceived threat to business, posed by FinTech players.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Insurance

Heirs Insurance Group Unveils Revolutionary Website for Seamless Insurance Experience

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Heirs Life Assurance- Investors King

Heirs Insurance Group has launched a website designed to revolutionize the insurance experience for its customers.

With a focus on simplicity, accessibility, and personalized service, the new website aims to streamline the process of obtaining insurance coverage and empower customers to make informed decisions about their insurance needs.

The website boasts a range of innovative features that make navigating insurance options easier than ever before.

From simple and intuitive navigation menus to personalized insurance recommendations, the website is designed to guide customers through every step of the insurance process quickly and efficiently.

According to Ifesinachi Okpagu, the Chief Marketing Officer of Heirs Insurance Group, the new website embodies the company’s commitment to delivering exceptional customer service.

“Today’s customers want simplicity, and this new website delivers on that request,” Okpagu said. “We are empowering customers to take control of their lives, their businesses, assets, and their most cherished people.”

One of the key features of the website is its personalized insurance experience, which takes customers through a short journey to help them identify the best insurance plan for their needs.

Whether customers are looking for coverage for their home, car, business, or loved ones, the website provides tailored recommendations to ensure they find the right insurance solution quickly and easily.

With its user-friendly interface and innovative features, the new website from Heirs Insurance Group sets a new standard for the insurance industry, making it easier than ever for customers to protect what matters most to them.

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Banking Sector

Safaricom, Access Holdings Forge Partnership to Revolutionize Remittance Corridor in Africa

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Access bank

Safaricom, the leading telecommunications company in Kenya, has entered into a strategic partnership with Access Holdings, spearheaded by Aigboje Aig-Imoukhuede.

The collaboration aims to revolutionize the remittance corridor between East and West Africa, marking a significant step towards enhancing financial inclusion and empowering millions of individuals across the continent.

The partnership comes on the heels of Access Holdings’ recent acquisition of the National Bank of Kenya Limited, signaling the company’s ambitious expansion into the East African market.

Leveraging Safaricom’s extensive network and expertise in mobile money through M-Pesa, which currently dominates the mobile money market in Kenya, the alliance seeks to create seamless and efficient channels for remittance transactions.

Aigboje Aig-Imoukhuede, the driving force behind Access Holdings, expressed enthusiasm about the collaboration, highlighting its potential to transcend traditional boundaries and foster greater economic connectivity between East and West Africa.

He highlighted the fusion of collective expertise and resources between the two entities, underlining their shared commitment to driving financial inclusion and empowerment across the continent.

The partnership holds promise for addressing the challenges faced by millions of Africans in accessing affordable and reliable remittance services.

By connecting more than 60 million customers and 5 million businesses across eight countries, the collaboration aims to facilitate over $1 billion in daily transaction value, significantly boosting the flow of remittances within and outside Africa.

With the first phase of the collaboration focusing on key markets such as Nigeria, Kenya, Ghana, and Tanzania, stakeholders anticipate a transformative impact on the remittance landscape, paving the way for greater intracontinental trade and economic integration in line with the objectives of initiatives like the African Continental Free Trade Area (AfCFTA).

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Banking Sector

EFCC Urged to Repatriate Recoveries to NDIC for Depositors’ Relief

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The Nigeria Deposit Insurance Corporation (NDIC) has made a fervent plea to the Economic and Financial Crimes Commission (EFCC) to expedite the repatriation of recovered funds to its coffers to facilitate the timely reimbursement of depositors affected by bank failures.

During a recent meeting between the Managing Director of NDIC, Bello Hassan, and the Executive Chairman of the EFCC, Ola Olukoyede, at the NDIC headquarters in Abuja, Hassan stressed the importance of enhanced collaboration between the two agencies in recovering depositors’ funds lost due to bank failures.

Hassan emphasized that the return of recoveries made by the EFCC on behalf of the NDIC would significantly contribute to the prompt reimbursement of affected depositors.

He commended the EFCC for its unwavering efforts in combating corruption and financial crimes, highlighting its crucial role as a key member of the Taskforce on Implementation of the Failed Banks Act chaired by the NDIC.

The NDIC boss also highlighted the existing partnership between the two organizations, which led to the establishment of the NDIC Help Desk at the EFCC in 2022.

He disclosed that several high-profile cases referred to the EFCC were currently under investigation.

In response, Olukoyede reiterated the EFCC’s commitment to collaborating closely with the NDIC to combat financial crimes and safeguard the integrity of the Nigerian banking sector.

He pledged to intensify efforts to repatriate recovered funds promptly, acknowledging the interconnectedness between criminal activities and bank failures.

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