The Central Bank of Nigeria (CBN) has assured that Financial Technology (FinTech) companies will not take over the roles played by commercial banks in delivering services customers.
Speaking at the Bi-Monthly Forum of the Financial Correspondents Association of Nigeria (FICAN) in Lagos at the weekend, CBN Director, Banking and Payments System Department, ‘Dipo Fatokun said the demand for the services of FinTechs will continue to rise, even as they need commercial banks’ to enable them operate effectively.
He noted that the increasing roles of FinTech companies in the payment system will allow banks to focus more on their traditional roles of financial intermediation.
Stating that the need for collaboration between the FinTechs and banks will always continue to be on the rise, he said “none can displace the other. There will be more prominence for the FinTechs going forward.”
The CBN director explained that banks in developed world are now focusing on their core functions and leaving other roles to service providers. “FinTechs have always been in existence, it is just that more prominence is being given to their roles. In some jurisdictions FinTechs are being allowed, or plans are under way to allow them connect to the central bank which, previously, was the exclusive preserve of the commercial banks,” he said.
Continuing, he said: “The fear has always been there that FinTechs will take over the roles of the banks and that a time will come when there will be no bank. Fintechs are not licenced as financial institutions, they cannot take deposits, and they can make payments out of bank accounts. They can only facilitate payments or make it easier but the banks will still continue to play a very big role”.
“Banks provide hundreds of services outside of payments. They open Letters of Credit give out loans and you can only give loans if you take deposits. They banks provide guarantee, either an advance payment guarantee or a performance bond for contractors. For you to do that you need to be a licenced financial institution,” he said.
According to him, there are numerous services that are provided by the banks that cannot be provided by the FinTechs adding that FinTechs have played a complementary role for the baking industry. Such roles, Fatokun said, have made it possible for banks to provide services at cheaper rates and also to get to the nooks and crannies where hitherto they will not be able to provide services.