Financial technology (Fintechs) companies are set to disrupt the banking system by controlling at least 40 per cent of the global financial services in the next 10 years as the underlying technology behind it, Blockchain technology gains traction across all sectors of the economy.
Chief executive officer, Ausso Leadership Academy and founder, CWG Plc,
Mr. Austin Okere, in presentation delivered at the 2018 Lagos Bankers & Stakeholders’ Nite last week Thursday said blockchain was expected to disrupt global supply chains by boosting transaction speed across borders and improve transparency.
“Here in Nigeria, blockchain can help immensely unlock the immense capital locked in land assets that are not enumerated because of an antiquated system of land administrated that is very ripe for disruption.
“Blockchain is a shared virtual public ledger where encrypted transactions are confirmed by outside parties. Confirmed transactions are placed in a “block” and added to the chain, hence the name blockchain,”Okere said.
He also explained that a fintech company called TransferWise founded by Taavet Hinrikus, was using blockchain technology to streamline international money transfers, significantly disrupting that sector by offering a 90 per cent discount on traditional bank transfer fees.
“In Taavet’s view, Fintechs will command about 40 per cent of the global financial services market in the next 10 years,” said Okere.
He said the changes coming with blockchain would be as large as the original invention of the internet, and this may not be overstated. “Who would have imagined a decade ago that e-commerce, championed by Amazon and Alibaba will be displacing high street retailers, or that ride hailing will be dominated by UBER, a technology platform.
“There seems to be a seamless change happening in the financial sector. According to Anthony Jenkins, former CEO of Barclays, bank branch traffic has halved in the last five years, and bank profitability could collapse by 60 per cent in the same period. A 2015 Goldman Sachs report estimated $4.7 trillion of financial services revenue was at risk of displacement from fintech groups,” he said.
Okere stated that the biggest threat to the banks has been precisely their seeming success occasioned by centuries of relatively significant higher returns, which has engendered an attitude of invincibility and pomposity, characterised by a loss of touch with their customers.
“The promise of Fintech is great. It is shaking up a stodgy banking system and helping to build a more efficient one, especially for consumers and small businesses,” he stated.
Speaking further, he said the world was studying the experience of the emerging markets, embodied by the widely successful MPESA mobile money system, championed by Safaricom in Kenya used by 60 per cent of Kenya’s population and contributes 44 per cent of their gross domestic product (GDP).
“Nigeria is no exception with fintechs such as Interswitch, CWG, Paystack and Flutterwave holding sway. Take for instance, Diamond Bank with seven million accounts after 23 years was able to add an additional six million accounts in just one year after the launch of the Diamond Yello Account in collaboration with CWG and MTN,” Okere said.
In Nigeria for instance 84.6 million people, accounting for 47 per cent of the population are unbanked. In sharp contrast, mobile phone penetration is very high at 94.5 per cent; a perfect set-up for the fintechs to exploit in their mobile dominated financial services offering,” he added.
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