COVID-19 threatens FinTech operations in Nigeria

A new report by PwC Nigeria, says financial technology (FinTechs) who whose core businesses entail lending and offering payment services are bound to be the worst hit by the COVID-19 pandemic.

According to the report, titled Changing Competitive Landscape: Fintech and the Banking Sector in Nigeria, FinTechs operating in the loan segment will be affected simply because a significant number of their clients will be unable to fulfill their loan obligations.

This is due mainly to the economic fallouts of the pandemic, which triggered a recession that ultimately resulted in many employees losing their jobs.

The report also pointed out that the situation is not all gloomy and hopeless. It said the pandemic and subsequent lockdown measures that were imposed by the government, helped to shift most transactions online.

Recall that a lot of banks shut down their branches, even as customers resorted to e-banking services to meet their financial needs.

The report noted that FinTechs are in a good vantage point to take advantage of the current situation. In other words, as social distancing continues to be a norm (even as bank customers are encouraged to use online mediums), FinTechs can take advantage of the situation by facilitating easy online payments whilst increasing their profitability in the process.

PwC also recommended that Nigerian banks and financial technology (FinTechs) companies in the country should work more closely together in order to triumph over the damages caused by the Coronavirus pandemic.

It advised that the already existing synergy between banks and FinTech companies should be strengthened in such a way that it benefits both parties.

“In conclusion, corporate entities in the financial services space must begin to realign their business strategies to recognise the sweeping technological changes in the business environment. In addition, financial service players need to recognise the changes brought upon the sector as a result of the Coronavirus pandemic. The playing field should be leveled for both FinTech and banks to compete or collaborate efficiently,” the report concluded.