Whoever comes up with solutions that will solve real life problems such as improving payment systems, reducing ATMs queues, cyber security and improving financial inclusion will make a pile of money in 2017 according to experts in the financial technology.
Concerned about embarrassing queues in front of ATMs and trouble completing Point of Sales transactions, banks and Fintechs will deepen investments aimed at bringing digital channels to customers and find ways of improving payments.
According to a report by Nigeria Inter-Bank Settlement System Plc, the number of ATMs in Nigeria is 16,600 units and commercial banks have a deficit of 72.33 per cent. The Nigerian Bureau of Statistics says the volume of transactions from Jan-Oct 2016 is 470.9 million.
“CBN’s target for ATM in Nigeria is 60,000 units. This speaks to a need to scale up e-payment system by the CBN,” says Olubukola Oyeboade, senior financial accountant at Mixta Africa S.A.
Olaseni Alabede, business leader processing enterprise security solutions at Mastercard in a post on LinkedIn predicts that the digital space is where a lot of the innovation will be experienced in 2017.
The revolution is already underway. Figures by the Central bank of Nigeria show that over 37.33 million mobile money transactions with total value of ₦589.34 billion was recorded as at October 2016 in Nigeria.
In November last year, The CBN said from May 2017 it will no longer regulate the Merchant Service Charge (MSC) on electronic transactions. MSC is the fee merchants such as supermarkets pay for payment customers make to them through electronic payment channels such as Point of Sales (PoS).
The effect of this policy is that it will ultimately boost payment card issuance, investment in loyalty programmes and the expansion of acquirer network infrastructure across the country.
“Having queues for cash-out at ATMs or at Mobile Agents is not financial inclusion. The last mile of payment in the value chain needs to be catered for. Whoever is able to solve for those little things that people go to the ATMs for will win in 2017,” said Alabede.
Alabede also said that while a few companies have ventured into big Financial Inclusion (FI) initiatives, such as setting up FI innovation labs, partnering with governments to drive FI, the progress they have made is marred by imitation companies without real products or properly defined business models.
Raphal Ossai, product manager (ATM Business) at First Bank in a response to the post said: “2017 is a year for the digital space. I see more customers embracing digital banking as people become more impatient with the old ways of financial banking.”
Companies that improve user experience rather than just nice applications and solutions, by removing friction in the payment process will gain the high net worth individuals, the burgeoning middle class and millennias as loyal customers, says Alabede.
Experts say that as payments systems move online, the threat of fraud transactions, systems and mobile device compromises will significantly increase; hence solutions that tackle the challenge of identity protection, seamless customer authentication and fraud prevention will play a critical role in growing digital economy.
Digital disruptions will see companies innovate and they will no longer see lack of infrastructure as a problem but an opportunity says Alabede.
“Business models like that of Airbnb, Uber and kickStarter will be adapted to the local context in SSA,” says Alabede, “Very soon, you will be able to hail a plumber or carpenter (just like Uber), share a hostel on campus, share assignments, or pair a micro-lender to a borrower in a peer-to-peer fashion in 2017.”
Increasing penetration of smart phones will help drive the innovation says Mackson Isebitil, a financial services contractor, “With the level of market penetration of android phones, it’s also possible that Android and Google Pay may also make foothold in Sub-Saharan Africa.”
However there is a note of caution. “I also see a lot of money going down the drain due to the fact that many want to be part of the buzz but may not do enough analysis or proper projection to be sure they are investing right,” said Abimbola Ogunti, head, customer experience and e-Channels at Coronation Merchant Bank.