Financial technology (FinTech) is redefining the Nigerian banking landscape for the better, by enhancing the efficiency, security, scalability, reliability and affordability of existing banking services, and by enabling the creation of new, innovative ones. A report published by Finextra in 2011 revealed that mobile money operations in Nigeria had grown from an average monthly transaction value of 5 million dollars to 142.8 million dollars in 2016. It is also hoped that FinTech will make it possible to address the remaining challenges that have arisen from these services, like cybercrime, the exponential growth of the customer base and the increasing popularity of cryptocurrencies such as Bitcoin, which are said to facilitate tax evasion and money laundering, as well as to be lacking any form of control or consumer protection against fraud.
Available data shows that Nigeria is becoming Africa’s FinTech hub, after having experienced a boost in mobile banking operations as a result of the considerable increase in mobile subscriptions. Not only is FinTech helping to build a more efficient banking system, it also promotes financial inclusion in the country, by providing unbanked citizens with practical, yet still formal, alternatives such as mobile money.
The financial exclusion rate has thus kept on diminishing since 2008, from 53% that year to 39.7% in 2013. It is still unclear whether FinTech represents a challenge or an opportunity for banks, but the latter have acknowledged the competitive edge it can give them. It is thus in their interest to take the necessary steps to embrace the emerging technological innovations.