Earlier this month, top dignitaries in Nigeria’s business and political sphere gathered to launch a new landmark within the country; SunTrust Bank, Nigeria’s first financial technology bank.

Fintech, which means Financial Technology, is a sector that adopts the use of technology in channelling financial transactions and making financial services more efficient. Fintech services include Peer-to-Peer lending, Digital Insurance, Digital Banking, Online Stock trading, Crowdfunding and CrowdInvesting.

Fintech banking is a growing disruptive trend in the banking sector that is challenging the conventional traditional banking. In 2014, the global investment in Fintech ventures tripled to $12.21 billion from $4.05 billion. Venture investment growth in Fintech in 2014 was 201 percent compared to 63 percent in the global Venture-capital Investments.

At the opening, the Managing Director and Chief Executive Officer of the bank, Muhammad Jibrin, said, “most customers of tomorrow will not be the ones that go to the banking hall, so we need to be able to respond positively to the needs and expectations of the customers of tomorrow, and that is at the heart of our vision and strategy as tomorrow’s bank today.”

In 2015, Interswitch, a Fintech company in Nigeria disclosed that their annual transaction volume was N4 trillion yearly. In Nigeria, most commercial banks are integrating Fintech into their operations to capture more of the online market. Guaranty Trust Bank launched its 737 agent banking to gain into the technological space. Customers can transfer money, pay bills, purchase airtime, and perform other transactions.

Fintech banking is not new in the country as most of the traditional banks already have Fintech activities integrated into their business model. Although SunTrust is being launched as Nigeria’s sole Fintech company in the country, the integration of Fintech services by traditional banks poses a threat to its establishment. They can easily leverage on their existing customer base to create those services.

The rise in technology adoption in Nigeria has largely impacted commercial banks as most traditional banks have undergone massive retrenchment activities to reduce their cost of operation and retain the ability to leverage the online space. Several Nigerian banks are are changing their models, using technological banking to increase their profits. On the flip side, low Internet penetration, low rate of financial inclusion, and cybercrime activities could hinder the growth of Fintech in Nigeria.

The creation of SunTrust reflects a new path in the country’s Fintech sector; it’s expected that more startups will be created to drive financial inclusion in Nigeria. Peer-to-Peer Lending adoption in Nigeria is relatively non-existent compared to Zidisha in East Africa and Lendico in South Africa. Also, the Digital Insurance sector adoption rate of Fintech is still low. There is also no established digital insurance firm now in Nigeria, but it is likely that some would be introduced in a couple years; companies are seeing the need to change their business models to adopt friendly technology to attract more customers.

Apparently, the potentials and benefits of Fintech outweigh its challenges. And Nigerians are optimistic about seeing more companies enter into the sector.

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