In Finance, Newcomers, Old-timers Are Welcome

Whoever says newcomers are not welcome is certainly a cruel old-timer. The newcomers in the Nigerian finance market are certainly shaking complacent old-timers awake from their slumbering on status quo couches.

We call these newcomers in finance,  fintechs. They tend to leverage modern technologies to provide seamless and bespoke financial services. In economies where financial sector growth had been abysmal and informal sector prevalent, the stream of new entrants in finance is refreshing breeze. 

Most fintechs are not usually burdened with the costs of running a network of physical bank branches like counterpart old-timers, and their employees may as well work remotely.

Whoever says driving primarily for profit is critical for new business is certainly not a newcomer seeking first to achieve a clientele benchmark. In order to woo clients, fintech offer advantages that many traditional bank models cannot afford.

Fintech account subscription promotion strategies include bonuses for saving deposits, low or zero fees for bank-to-bank transfers, flexible investment options, bonuses for clients gained through customer network marketing, amongst others.

While promotions may secure new accounts, it requires a lot more to grow demand. When operating in economies with high incidence of poverty, fintechs need to consider how to reach the poor and excluded market segments with tailor-made financial services. 

Whoever says experience that older folks have garnered is useless, definitely has not been properly groomed. As brilliant as fintechs may be, their resilience may depend on their willingness to learn through cooperation and partnerships, rather than by fierce competition.

Like the energy of youth that tends to run wild, some fintechs may want to run wild against regulatory frameworks to their own detriment. In some recent instances, there has been reports of sanctions on fintechs by Nigeria's Apex bank.

Since older banks have the benefit of hindsight working in the Nigerian banking and finance market, building win-win partnerships may be important for learning linkages, knowledge spillovers, and sustainable growth.

Other likely concerns include:

How are fintech firms able to achieve economic efficiency by minimising cost of exchange?

How may fintechs drive sustainable growth and financial inclusion?

How may partnerships rather than competitive strategies raise productivity in the banking and financial services sector?

Photo credit: BFA Global