Hand in hand, banks and Financial Technology (FinTech) firms can speed up efforts to digitise the economy and drive financial inclusion, as well as create endless opportunities; but only if they can work as partners and not rivals, an expert has said.
According to Sebastian Yalley, Chief Executive Officer of Accelerex Ghana – a FinTech that focuses on payment solutions and services, there is not only enough space to accommodate the two but there is so much they can achieve working together as partners to deliver value to customers, and to leverage the full potential of technology – which would allow them to meet the demand of digitally savvy users.
“We are not a threat; we are actually great partners. We are great because we are very good at what we do. As fintechs, we are nimble, we are agile and we are quick to implement. Banks, on the other hand, don’t have this capacity by the nature of how they are set up; they are so much regulated. So, what’s important is fintechs focusing on delivering the right technology and banks focusing on collecting the money; and together we all make fees and commissions to keep us happy,” he said.
Over the years, there have been debates about fintechs competing with financial institutions for the same customers or offering the same services – but Mr. Yalley, who has several years of experience working in the banking sector, holds a different view. To him, the two complement each other because, together, fintechs and banks can have access to broader markets, along with a number of other benefits.
Unified efforts can also create a solid financial system that works for all. Such engagements lead to higher integrity, lesser cost of deployment, security and greater transparency. “There is a perceived rivalry but I don’t think it exists; through my interaction with banks, that rivalry doesn’t exist.”
For fintechs, partnerships with banks will provide access to funds for future growth. With joint efforts, their businesses will more likely be scalable and sustainable in the long run.
Meanwhile, for banks, such partnerships would mean a data-driven approach with lesser costs, low redundancy, solid technical know-how, and increased efficiency. Banks can also significantly reduce structural costs, provide employees more time for value-added tasks, and enable enhanced regulatory compliance.
The Bank of Ghana, in May this year, announced the establishment of a new Fintech and Innovation Office to drive the bank’s cash-lite, e-payments and digitisation agenda. The new office, according to the Bank of Ghana, will among others be responsible for licencing and oversight of dedicated electronic money issuers – that is, mobile money operators and payment service providers (PSPs).
It will also assume the same responsibility for closed-loop payment products, payment support solutions and other emerging forms of payment delivered by non-bank entities.
Mr. Yalley welcomed the establishment of a regulatory framework for fintechs and said: “It is a very good move by the central bank, and it actually shows the commitment it has in the whole agenda of digitising and promoting financial inclusion”.
He noted that proper regulation will open up the fintech space and make more people innovative, because companies in that space will be licenced; and the central bank will now be enabled to get a full grip of issues to know exactly what is happening and be able to regulate the space better.
“For so many years we have had fintechs partnering with banks while there was no regulation, and what it meant was that players could do what they wanted; hence the need for this. It will bring some sanity, it will help all of us; but I think together as a whole, it will create a better economy and help in the country’s digital agenda.”