I started my career in the 90's, and back then there were a number of new generation banks including Guaranty Trust Bank and UBA that were trying to change the status quo, and usher a new level of accessibility to financial services for Nigerians.
While there has been massive growth in the sector in the decades since then, the rise of digital technology over the past 10 years has had a profound impact on the finance industry globally, and Africa is no exception.
With the growth of digital apps, the proliferation of the internet, and the widespread adoption of smartphones, traditional banking models are being disrupted, paving the way for a new era of finance all over the continent, especially in Nigeria. From Personal Finance, to Credit, to Insurance, Business Banking et al.
Bill Gates said in 1994 that , "We need banking, but we don't need banks anymore." This statement is becoming increasingly relevant in today's digital age, as consumers look for new, more convenient and accessible ways to manage their finances. In Nigeria, this has led to the emergence of embedded finance, which is transforming the financial landscape.
Embedded finance refers to the integration of financial services into the everyday products and services that people use. This can include things like payment systems, insurance, loans, and other financial services, all seamlessly integrated into apps and websites that people already use. The result is a more convenient and accessible way of managing money, without having to navigate the traditional banking system.
The Widespread Adoption of Digital Products
The proliferation and rise of digital financial products in Nigeria like Paystack, Flutterwave, Chipper Cash, Cassava, Anchor etc has played a key role in the rise of embedded finance. These apps are making it easier for people to manage their money, pay bills, and make transactions. The adoption of these apps has been driven by the growth of the internet and smartphone usage in Nigeria, which has made it possible for more people to access financial services on their mobile devices.
The Desire for Convenience in Finance: Another factor that has contributed to the rise of embedded finance in Nigeria is the growing demand for more convenient and accessible financial services. People want easy access to their finances, they are constantly on the lookout for ways to simplify their finances. Embedded finance offers a solution to this, with its seamless integration into the products and services people use every day.
Providing Access To All:
The future is embedded finance. However, it is important to note that the transition to digital and alternative means of finance must be accelerated in order to reach critical mass. The recent policy of the Central Bank of Nigeria to redesign the naira notes is a testament to this. Despite the removal of over 2 trillion naira in old notes from circulation, the shortage of accessibility to the new notes has resulted in long queues at ATMs all over the country, causing inconvenience to consumers.
This highlights the need for a faster pace of innovation in the financial sector, to ensure that the benefits of embedded finance are accessible to all. The successful adoption of digital financial products in Nigeria is crucial in order to keep up with the fast-paced changes in technology and the growing demand for convenient and accessible financial services.
While the traditional banking model may be slowly fading/changing, it is important to remember that the financial sector still has a vital role to play in facilitating the transition to a more digital landscape. Banks can provide the infrastructure and resources that are necessary to support the growth of embedded finance and ensure that it is adopted in a responsible and sustainable manner.
Bringing It Together:
In conclusion, the future of finance in Africa, particularly in Nigeria, is embedded finance. However, the speed of the innovation and transition to this new model must be accelerated in order to reach critical mass.
The growth of digital technology, the proliferation of the internet, and the widespread adoption of smartphones has paved the way for this new era of finance, but we need to build on this foundation.
The recent policy of the Central Bank of Nigeria serves as a reminder of the challenges and obstacles that still need to be overcome in order to fully realize the potential of embedded finance in Africa. By working together, the financial sector and technology companies can drive this change, making financial services more convenient and accessible for consumers.
