40% of financial services business will be at risk of standalone Fintechs by 2020
Insights were gathered from over 50 Chief Executive Officers (CEOs), and Industry leaders across various segments of Nigeria’s Financial Services (FS) industry to prepare the report, which is titled “Nigeria FinTech Survey 2017”
Of all the impact Fintechs are having in the financial services sector in the country, the respondents see changing customer needs as top of the pile, with up to 60% indicating about 40% of financial services business will be at risk of standalone Fintechs by 2020.
Other key findings of the report are bulleted below.
- Insurance brokerage, Auto and Life insurance stand an equally high likelihood of disruption at 77%.
- Retail banking and Funds transfer have the highest likelihood of disruption at 92% and 85% respectively.
- Majority of respondents from traditional financial industry players believe that part of their business is at risk of being lost to standalone Fintechs, up to 92% in the case of Banks.
- Banks ranked loss of market share at the top Fintech related threat, closely followed by increased pressure on margins.
- Other FS incumbents ranked information security and privacy concerns as the key FinTech threat to their business.
“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,” PwC stated.
It added, “Capitalizing on the latest mobile, cloud and digital technologies, Nigeria is increasingly becoming home to many FinTech firms who are trying to shake up and be accretive to the banking value chain.”
Interestingly, the report indicated the respondents acknowledged the opportunities Fintech adoption will bring to the industry. They believe Fintechs will help bring in more money and reduce operational cost. Also, quite a large number believe Fintech adoption will improve customer retention and product differentiation.
As such, the Financial Services players plan to innovate in order to not die. Advisory Partner and Chief Economist, PwC Nigeria, Dr. Andrew S. Nevin Ph.D., made the following recommendations to the players.
- Incumbents should implement 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.
- Incumbents 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.
- By focusing on incorporating new technologies, incumbents can prepare themselves to play a dominant role in the new financial services landscape and maintain strong positions even as innovation alters the marketplace.
PricewaterhouseCoopers released the report few days ago in Lagos. Click here to get the complete version.