Recent business trends in the industry have seen banks and fintechs collaborate to solve problems for each other.
Globally and especially in Africa, the traditional financial services industry has come under intense competition from fintechs-companies driven by innovation, using technology and digital solutions to lure users and customers in the last five years.
In this market, there have been lots of talks about fintechs being the new banks and how banks should be ready to close shops for the more contemporary and fresher tech-driven companies.
But it doesn’t have to be so; recent business trends in the industry have seen banks and fintechs collaborate to solve problems for each other.
In the recently held The Ecobank Fintech Breakfast Series in Lagos, industry enthusiasts took turns to speak on the need for collaboration and partnerships between banks and fintechs.
One of those insiders was Gbenga Ajayi, who heads investment into Africa for fintech VC giants QED.
In his talk at the breakfast series, which was themed ‘Partnering for a stronger ecosystem’ to fit, Ajayi spoke on why banks and fintechs should care for each other.
Why banks should care about fintechs
The fintech industry in Africa has grown significantly over the years with different products that have matched the needs of massively growing digital users.
Ajayi points out that fintechs are here to stay, and it’s time banks start paying attention. The fintech investors listed three reasons banks should care.
1. Unrivalled customer satisfaction
Ajayi said that being digital natives, fintech founders have focused so much on customer experience and technology, making customer satisfaction superior to what banks often provide.
Having worked at Wise, Ajayi said the fintech company at a time had an NPS score of 71 compared to 21 of its traditional competitor Western Union.
2. Faster growth
Another point that Ajayi made was that fintechs grow at much faster rates than banks. He said;
3. Age of super fintech
Ajayi said that fintech companies offering multiple products should be of considerable concern to banks. He called these fintech companies super-fintech.
These fintechs, he said, came into the market with a single product line but soon introduced more products immediately they formed relationships with the customer.
Why fintechs should care
Also, in his talk, Ajayi spoke about why fintechs should also care about banks. He gave three reasons.
1. Licenses and regulatory strength
Aside from having the licences and relationships with regulatory bodies, banks seem to have something fintechs don’t have, which is regulatory muscle.
2. Lots of (unhappy) customers
Ajayi said that fintechs could take advantage of banks’ customer pool, with many unhappy customers.
3. Lots of money (the profit type)
Despite the continued growth of fintechs, banks still maintain sustained market share and have lots of money. Unlike in fintechs, the financial muscle is much more than just raising money.