Traditional Banks Advantage Over Fintech Firms
Recently, a report by CR2 on Africa’s fintech transformation was published. The report indicates that traditional financial institutions can still be a part of the fintech financial disruption if they leverage on their most substantial assets, client trust.
The report advises financial institutions that wish to quicken their advance to success in the fintech space to create partnerships with fintech startups and technology companies.
With such partnerships along with their long-standing client networks and more defined regulatory environment, it means financial institutions can grow their share of Africa’s digital market.
To demonstrate the significance of the association between banks and fintech, the CR2 report tells the story of how a Nigerian bank, GTB, lost clients after its mobile banking platform went offline.
The report then compares GTB’s misfortunes with the rise of the VC-backed fintech firm Kudabank, which saw the number of its customers rise from 300,000 to 1.4million in less than three years.
Nevertheless, the report argues that traditional financial institutions can still strive with VC-backed fintech startups if they determine to leverage their most important asset: client trust.
This observed client trust is substantiated by a fintech study carried out in Nigeria by the consulting firm, McKinsey consulting.
According to the outcomes of the study, about 67% of customers that use the bank in Nigeria had more trust in their bank than in fintech. And though the study also found out that Nigerian banks had occasionally made some mistakes, customers are still not fully willing to shift to fintech products.
In conclusion, the CR2 report prompts banks to take the opportunity to grow their share of Africa’s digits finance market. The report states:
“Longstanding financial institutions must respond with innovation services built through collaboration with enabling digital banking platform partners.”
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