Speaking on Fintechs and Changes in
Financial Intermediation, Demola Igbalajobi, an Executive Director of
SystemSpecs, made the above assertion at the Information Technology (IT) and
consulting webinar hosted by the Institute of Chattered Accountants of Nigeria
(ICAN) recently.
A financial intermediary is an entity that
acts as the middleman between two parties in a financial transaction. They are
meant to serve as a bridge in complex financial transactions and take a fee as
compensation for the risk involved.
Igbalajobi, who was represented by the
SystemSpecs’ Head of Payments Technology and Infrastructure, Mujib Ishola,
stated that fintechs have become an aalternative in the financial
intermediation process traditionally performed by banks and other licenced
money handlers.
“Fintechs are making inroads due to a
number of factors including their agility and speed to market, less
risk-aversion, focus on service rather than regulation, and the current
inefficiencies ii the operations of traditional banks,” he said.
He added that the rapid growth of digital
technology innovation has led to the rise of fintech platforms, facilitating
solutions in several areas including mobile money, insurtech, agrictech, crypto
transactions, and many others.
“Fintech can be operators that provide
direct services to customers. They cca provide platforms as a service, develop
platforms for other financial entities, or serve as a support platform for
ancillary services such as data referencing, data verification, and collection,”
he said.
More so, fintechs are focussing on specific
areas of customer needs, such as payment, lending, or verification, unlike
traditional banks who provide different types of financial services from a
single platform.
Armed with the power of modern technology,
the tech expert stressed that fintechs aim to replace the current framework of
licenced intermediaries and trusted central gatekeepers.
Igbalajobi said there are still areas of
concern as fintech platforms become ever more important as facilitators of
financial transactions.
“These include the need for fintech
specific regulations as well as compliance with the various regulators in the
system such as the Central Bank of Nigeria (CBN), Securities Exchange
Commission (SEC), and the General Data Protection Regulation (GDPR). There are
also need for data privacy, data security and stability of the fintech
companies themselves, to reduce risk to consumers,” he said.
Predicting evolving trends in the fintech
space, he said there will be more collaborations between fintechs and
traditional financial institutions, oope banking, artificial Intelligence (AI)
and web automation.