- Collaboration Vital to Banks’ Digital Payment Drive
Increased investment in innovative payment solutions and collaboration with financial technology companies will help commercial banks in their digital payment drive, banking and electronic payment experts have said.
They said the moves would also help Deposit Money Banks to sustain customer loyalty and remain profitable in the new global payment order.
The experts made these known in lectures delivered at the annual retreat of the Committee of E-Banking Industry Heads recently held in Abuja.
They highlighted the inevitability of the emergence of financial technology companies and the challenge they posed to banks and the traditional payment methods.
As a result, they said banks must become equally innovative to compete with the new entrants.
The two-day retreat was themed “Disruptive technology and the future of payments”.
It focused on how banks and other stakeholders in the e-payment system could position themselves to take advantage of the tide of financial technological innovations.
The Director, Non Traditional Channels, West Africa, MasterCard, Uwa Uzebu, described fintechs as the forces driving the exponential growth in the digital payment space.
He said, “In 2015, digital payments accounted for eight per cent of total global retail payment of $16tn. This is projected to grow to 24 per cent in 2020 when global retail payments would have increased to $21tn. The number of fintech start-ups has tripled and funding has grown seven times over the last decade”
Quoting a study by Accenture, the Managing Director/Chief Executive, SystemSpecs, Mr. John Obaro, said, “A total of $5.4bn was invested in fintech companies globally in the first quarter of 2016 alone. While global investment in fintechs in 2015 stood at $22.3bn.
He added, “Fintech inventions have the potential of altering existing financial systems, and revising the known roles and significance of banks.”
The Chairman, CeBIH, Mr. Dele Adeyinka, said the payment industry had witnessed the entry of non-bank players in recent times.
He, therefore, stressed the need for financial institutions to play their part in the quest to move the nation’s e-payment space to the next level.
Adeyinka said, “It is becoming evident that the key to success in this digital world is to evolve continuously in order to remain competitive and relevant to consumers. The way in which individuals and businesses accept payment is quickly becoming the next battleground of innovation. Consumers are now surrounded by a wealth of technologies.
“The payment industry has recently witnessed the entry of diverse non-bank digital players – both technology giants and start-ups who are presenting increased competition for banks.
“While these categories of entrants have generally not been major threats to the banking and payments industry in the past, the aggressive nature of the digital players, the prominence of smartphones as a channel and rapidly evolving customer expectations have all made a difference in recent past.
“To maintain the customer relationships and stay relevant, there is a need for all stakeholders to respond to these changes with new strategies, capabilities, and operating models.”
The Chief Executive Officer, Interswitch Group, Mitchell Elegbe, stressed the need for banks and other payment service providers to adopt disruptive technologies.
“You will also have to create your own monopoly, remain flexible and ready to adopt, after all you should expect to be disrupted. And beware of activity trap. Do not work so hard climbing a ladder only to discover it is resting on the wrong wall,” he said.
According to the Managing Director/Chief Executive Officer, E-Transact, Mr. Valetino Obi, e-payment providers should not be worried by the emergence of disruptive technologies but focus on how to use them to add value to their services and the financial ecosystem.
Disruption, he noted, had become the global norm, adding, “There’s a major global shift in consumer behaviour. People across many diverse countries and cultures are evolving a digital lifestyle.”
Emphasising the need for investment in digital innovations, the Technology and Digital Leader, West Africa, Akintola Williams Deloitte, Oluwole Oyeniran, said, “Payments technology is evolving at an unprecedented speed.
“Contactless cards, online payments, mobile payments, are all becoming more prevalent. Keeping pace with those technologies will require major investment from banks, and they have to contend with the fact that their new competitors-for example, Paypal and Aple already have an edge in digital technology. Banks will need to ramp up their investment to be able to make most of the opportunities that exist in payment technology.”
