Growing popularity of fintech threatens Nigerian bank profitability – fintech bitcoin news

Financial technology (fintech) companies are now among the biggest threats to the overall profitability of Nigerian banks, analysts at the country’s Coronation Merchant Bank (CMB) have warned.

The efficiency of FinTech

As a report conveyed by the local media explains that this threat of fintech services stems from their growing popularity with “tech-savvy” customers. According to CMB analysts, these clients prefer to use the more efficient services offered by fintechs rather than visiting physical branches of conventional banks.

Although Nigerian conventional banks are “apparently not concerned” by this threat, the media report nonetheless quotes Guy Czartoryski, head of research at CMB, as explaining why the findings of his bank’s study should be taken seriously. Using internet banks such as Kuda, Carbon, and Rubies as examples of fintech services that pose a threat to banks, Czartoryski explained:

These banking platforms are attractive to millennials and other tech-savvy customers and require little or no physical banking presence. The obvious advantage they have over conventional commercial banks is their low cost.

Banks are already in competition with Fintechs

Meanwhile, the same report also quotes Czartoryski as explaining why banks are seemingly indifferent to this threat. According to Czartoryski, banks are not too worried because they “see themselves as partners of online banking, offering customers cash withdrawals and providing them with a clearing service.”

In addition, conventional banks “also have their own USSD-based offers”. So this suggests that conventional banks are competing with Internet banks in some areas. Yet Czartoryski concludes that only “time will tell whether conventional banks are justified in their trust, or just complacent.”

Do you agree that fintechs are a threat to the long-term profitability of Nigerian banks? Let us know what you think in the comments section below.

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