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COVID-19 pandemic has created new opportunities for Fintechs to accelerate and enhance financial inclusion, amid social distancing and containment measures.
Fintechs are seen as technologically enabled financial innovation that could result in new business models, applications, processes, or products with an associated material effect on financial markets and institutions and the provision of financial services.
Big tech firms such as Alibaba, Amazon, Facebook, Google ad Tencen offer financial services as part of a much wider set of activities.
However, collaboration between banks and Fintech startups could be key for finding solutions in the new environment that the COVID-19 pandemic has brought about.
The global Fintech market is expected to grow at a compounded annual growth rate (CAGR) of about 20% and is projected to reach a market value of approximately $305 billion by 2025, according to a new report from Research and Markets.
According to Research and Markets, the key Fintech players include Robinhood, Ant Financial, Shanghai Lujiazui International Financial Asset Exchange, Oscar Insurance Corporation, Credit Karma, Kabbage, Atom Bank, Onfido, Uipath, and Microsoft.
In another new report, Research and Markets estimates that the global Fintech AI market was valued at $6.67 billion in 2019and will reach $22.6 billion by 2025.
In May 2020, UBS published a report in which it noted that the global Fintech sector would grow from $150 billion in 2018 to $500 billion by 2030.
Nigeria has a large population of 200M people, and 60% are financially included. Fintech sector is thriving because of factors which include a youthful population, increasing smartphone penetration, A focused regulatory drive to increase financial inclusion and cashless payments.
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In his presentation on ‘COVID-19 and Fintech in the Nigerian Financial System’ at the just concluded workshop for business editors and Finance Correspondent Association of Nigeria (FICAN), Kabir Katata, deputy director, Research Department, Nigeria Deposit Insurance Corporation (NDIC) said Fintech is changing how financial services are produced, distributed, and consumed.
It has tremendous potential to improve peoples’ lives. Fintech promotes financial inclusion, enhances customer experience, and enables delivery of financial services at lower costs and faster speeds, allowing providers to reach out to the unbanked and uninsured segments of the society.
Katata noted that COVID-19 has resulted in expansion of digital Finance – blurring borderlines between banks, big Tech and Fintechs. Such ongoing accelerations of digital trends are likely to remain beyond the COVID-19 pandemic. The world may never return to the original Fintech position that was there before the outbreak of this virus, said Katata.
According to him, regardless of the impact of the current shock, there is a need to ensure that authorities and researchers have the proper data to monitor and study Fintech and big tech credit platforms. Complementary efforts to bring Fintech and big tech lenders into the fold of official regulatory reporting should continue apace.
“As regulatory oversight increases, a thorough understanding of financial services in the Nigerian context, particularly in compliance, is becoming a prerequisite for success. Most fintech have a technology background but limited experience in financial services and will need to ensure that they develop or acquire this competency,” he said.
