Nigerian banks miss out on $14 billion Bitcoin market
by FRANK ELEANYA
February 21, 2017 | 5:22 pm| | | Start Conversation
…over CBN restriction, high costs
Bitcoin market capitalisation reached almost $14 billion in January 2017 however Nigerian banks missed out due to Central Bank of Nigeria’s (CBN) restriction, high costs of integration, lack of widespread consumer demand and limited understanding according to the latest Nigeria Fintech Survey report.
It would be recalled that in January 2017, the CBN issued a directive banning transactions in virtual currencies also known as cryptocurrencies. In a circular to the banks, the CBN said the ban was necessitated as a result of the non-regulatory nature of cryptocurrencies.
“Transactions in virtual currencies (VCs) are largely untraceable and anonymous making them susceptible to abuse by criminals, especially in money laundering and financing of terrorism. VCs are traded in exchange platforms that are unregulated, all over the world. Consumers may therefore lose their money without any legal redress in the event these exchanges collapse or close business,” the CBN stated.
The Nigeria Fintech Survey 2017 was released in February by PricewaterhousCoopers (PwC). The survey which aggregated responses from 49 chief executive officers (CEOs), heads of innovation, chief information officers and top-tier managers projected that Blockchain technology may result in a radically different competitive future in the financial services (FS) industry where current profit pools are disrupted and redistributed toward the owners of new, highly efficient Blockchain platforms.
During the launch of the report in February, a CBN spokesperson said the apex bank was making efforts to learn more about the Blockchain technology and have constituted a committee to study it.
Jumoke Ogundare, CEO, Asset & Resource Management Company said there was a need for collaboration and integration between banks, Fintech and the regulator. She also noted that “Excessive regulatory bottlenecks may cause significant delays in time-to-market. In essence, a lot of collaboration and engagement will be required to gain the regulator’s support,”
According to the PwC survey, cryptocurrencies are purely electronic currencies used for making payments anywhere in the world. Unlike traditional currencies, cryptocurrencies have no physical form, are not legal tender and are not currently backed by any government or legal entity.
Cryptocurrencies run on Blockchain which is a technology that combines mathematical, cryptographic and economic principles in order to maintain a database between multiple participants without the need for any third party validator or reconciliation.
PwC noted that if Blockchain technology is implemented correctly “could remove the need for reconciliation between parties, speeding up the settlement of trades or completely revamping existing processes, including enhancing efficiency in loan origination and servicing; improving clearing house functions used by Banks; and facilitating access to securities. For example, a bond that could automatically pay the coupons to bondholders and any additional provisions could be executed when the conditions are met, without any need to human maintenance.”
Experts who spoke on the survey said it was important that companies keep abreast of innovations happening globally and within the country.
“It is equally important to have the awareness to understand how these innovations can be applied to customer pain points to open up new ways of enlightening one’s customers. We follow keenly what is happening in the technological space, and adopt those innovations that are required to simplify our processes and enhance customer value,” said Tunde Hassan-Odukale, executive director, Leadway Assurance Company Limited.
Big Read |