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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.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial market.

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Naira Mastercard: GTBank Reduces International Spending Limit to $100/Month




GTBank Further Caps International Spending Limit on Naira Mastercard

Forex scarcity has forced Guaranty Trust Bank (GTB) to further reduce the international spending limit on its Naira Mastercard from $500 per month to $100 per month.

The lender had reduced international spending limit from $3,000 per month set in 2018 to $1,500 per month in March 2020 when COVID-19 eroded the nation’s foreign reserves.

We would like to inform you that the monthly spending limit on your GTBank Naira Mastercard has been reviewed from $3,000 to $1,500 for your international online and POS transactions effective March 25, 2020” GTBank stated in March.

However, persistent foreign exchange scarcity has forced the lender to once again reduced its international spending limit from $1,500 per month to $500 per month in the same March before finally reducing to $100 per month on August 11, 2020.

According to the bank, the new limit will affects online, PoS and ATM transactions, both transactions done in Nigeria and abroad.

The notice reads “Dear customer, the monthly spending limit on your GTBank Naira Mastercard is now $100 for international transactions. Thank you for banking with us.”

Customers have said GTbank has also implemented the Central Bank of Nigeria’s recent policy of ‘no cash withdrawal of transferred funds into domiciliary accounts.’

Only electronic fund transfers into Domiciliary accounts can be transferred from such accounts while cash deposits into such accounts can only be withdrawn in cash also,” said Isaac Okorafor, Director, Corporate Communications.

Therefore, customers of GTBank and other Deposit Money Banks are advised to check with their banks for the latest developments that may hurt their operations.

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Magu Probe: FCMB Denies Paying Money into Pastor’s Account




No Money Was Paid Into Pastor’s Account, FCMB Tells Nigerians

Following a widely publicised report that the Managing Director of FCMB Group Plc claimed that he mistakenly transferred N573 million to an account of Magu’s pastor, the lender has come out to refute the report.

In a statement released by the FCMB Group on Wednesday, the bank said the report was false as there was no transfer of such amount into the said account.

This, the bank said was clarified during the presidential hearing in Abuja by the bank’s Managing Director.

According to the bank, the error had occurred only on file during a system upgrade in 2016. This upgrade, the bank claimed led to multiple unrelated entries into a single account under the affected customer’s name on one of the lender’s reports.

The bank’s statement reads “Our attention has been drawn to widely circulating stories incorrectly stating that our Managing Director, during a recent presidential hearing in Abuja, testified that the bank mistakenly transferred N573m to the account of a church and the said error was not discovered for 4 years. We feel it is in the public interest to state emphatically that there was no transfer of N573m into this account, mistakenly or otherwise.

“To provide further clarity, during a maintenance upgrade of our systems in 2016, a defective file led to the aggregation of multiple unrelated entries into a single balance under the affected customer’s name in one of our reports.

“This aggregation occurred only in the weekly automated report to the Nigerian Financial Intelligence Unit. It had no effect on any customer account balance or statements and therefore was not immediately identified.

“Our Managing Director clarified to the Presidential panel that the system generated report was incorrect and that there was no mistaken transfer of N573 million. He also submitted comprehensive documentary evidence to this effect.

“We appreciate that comments may have been misconstrued and therefore believe it is important to emphatically clarify the position that there was no mistaken transfer whatsoever, as stated above.

“FCMB continues to fully cooperate with the panel, and has been entirely transparent in its reporting. We remain committed to ethical and professional conduct at all times.”

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FG Implores Parastatals to Promote the Country’s Digital Economy Initiative



digital economy

FG Tells MDAs to Promote the Country’s Digital Economy

The Ministry of Communications and Digital Economy under the management of Dr. Isa Pantami, has implored all the federal government parastatals to promote and safeguard the country’s digital economy initiative.

Dr. Isa Pantami, while presenting the keynote address in a virtual forum organised by the Association of Telecoms Companies of Nigeria (ATCON),  said based on the negative effects of COVID-19 pandemic, the demand for critical data infrastructure and broadband is now high.

The minister urged government parastatals to put in effort to uphold and promote government’s digital economy initiative designed to reduce the effect of the pandemic on the nation. He also disclosed that the interests of all Nigerians would also be protected by the government.

Federal government will continue to develop its digital economy policy for a digital Nigeria. Both the Nigerian Communications Commission (NCC) and the National Information Technology Development Agency (NITDA) that are under the supervision of my ministry, now have special departments that promotes digital economy initiative and I urge them and all other parastatals under my supervision, to ensure that they promote the digital economy initiative of the federal government in order to maintain investor’s confidence and to protect the interest of Nigerians, especially telecoms consumers.

Government on its part will ensure that the interests of telecoms companies and the interest of Nigerians are protected. Government is currently addressing the challenges in the cost of investments such as the issue of vandalisation of telecoms infrastructure, and President Muhammadu Buhari has officially directed all security institutes, through the Office of the National Security Adviser (ONSA), to protect telecoms investments in the country,” Pantami said.

The Executive Vice Chairman of NCC, Prof. Umar Garba Danbatta, when making his presentation said “The COVID-19 pandemic rapidly and sharply ravaged the globe, Nigeria is no exception. Governments therefore, faced unprecedented challenges from COVID-19 pandemic. The impact affects most sectors of the global economy, ranging from health, to education, to finance, to trade and investment.

While explaining the Commission’s efforts at resolving consumer-related issues, Danbatta noted that less than 500,000 people activated Do-Not-Disturb (DND) code as at 2015 when the code was introduced by the Commission but presently, over 22,722,366 people line on the code.

He also made it known that the commission has resolved 98 per cent of service-related complaints received from telecoms consumers from January 2019 to April 2020.

according to Danbatta “the Commission has monthly engagements with operators as well as quarterly industry working group on Quality of Service and Short Codes, and is currently monitoring 2G Key Performance Indicators, while the KPIs for 4G are being prepared.

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