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Banks Have Moved On From Competition, Now Partner Fintechs To Grow Sector

Fintechs have changed and continue to change the face of the financial sector in Nigeria. At first, there was intense competition among the new brides (Fintechs) and conventional financial institutions, but now, there appears to be increasing collaboration between both parties with the ultimate aim to create greater opportunities and service offerings for Nigerians.

In this exclusive interview with Roy Zakka, CEO of Layer, a FinTech that recently partnered with UBA Plc, he explained that operators have moved on from the Fintech versus Traditional finance narrative.

To him, the banks have realised that they cannot build what the FinTechs are building, so rather than fight them, they are partnering with them.

The Ireland-based firm is the first of European fintech firms to work directly with an African bank to roll out a fast-paced, collaborative platform that aims to transform how data is utilized across the banking sector.


Having spent 25 years in the wireless and mobile sectors, and the last 10 years in financial services, how would you assess Nigerian FinTech space, compared with the Irish landscape?

Both Ireland and Nigeria are home to more than 250 of the world’s leading financial services firms. Ireland, for example, is the fourth-largest exporter of financial services in the EU. Nigeria’s fintech scene raised more than $600 million in funding over the last decade.

As global technology and financial services hubs, Ireland and Nigeria are perfectly placed to produce a world-class crop of innovative fintech leaders.

I see many similarities between the two except for one massive difference. Nigeria has a dramatically larger population. By nearly 195 million.

Ireland has invested in technology since the early 2000s and I can see the same happening here in Nigeria.

Imagine what new technologies and innovations 200 million people can produce. The possibilities are endless.

Already, there seems to be a war between FinTech operators and conventional financial institutions. Some of the former believe they are disadvantaged because of their financial and infrastructure muscles. What is your take on this?

I think we have moved on from the Fintech versus Traditional finance narrative. Banks have realised that they cannot build what the fintechs are building so rather than fight them, they are partnering with them. Our partnership with UBA is evidence of this.

What most fintechs do not have access to is a banking licence. So I think partnerships are the obvious way to go for most of these fintechs.

Fintechs tend to specialise in different parts of the banking value chain, but not all of it. Regulation is slowly but surely becoming more manageable which will help increase the speed of innovation in financial services. Banks have started to seriously consider partnering with, or acquiring great fintech startups. The future of financial services is collaboration.

Exploring opportunities in the Fintech space, what are the gaps you have observed and plan to fill in Nigeria?

The gaps we see in Nigeria revolve around our digital transformation platform alongside our Marketplace offering. The Layer Marketplace is an ecosystem that enables our clients (banks and FIs) to deliver new value propositions to their customers across their verticals, be it Retail, Corporate, Large, Small or Micro Business. Our Marketplace consists of curated fintechs and other partners integrating into the Layer platform that enables our clients to easily select, configure and deploy the capabilities they require from these 3rd parties into their own customer journeys.

What we are offering to banks across Nigeria is a platform that rapidly digitalises their bank, allowing them to offer neo bank capabilities while also choosing from the best fintechs in Nigeria and from across the globe.

What are the attractions to Nigeria despite the instability in the country?

Apart from being the continent’s largest economy and population, the move away from reliance on oil as its main driver of the economy has seen a huge growth in the financial services industry. With 40% of the population being financially excluded, this gives us significant opportunities to help financial inclusion across the country. We are already speaking to many banks throughout the country and see Nigeria as a strategically important base for us. We have had a regional office here for over 3 years now.

There are scores of FinTech firms in Nigeria, what is Layer doing differently?

Where we differ from many fintechs in Nigeria and elsewhere is that Layer has chosen to tackle the biggest issue traditional banks have today. And that is digital transformation.

Most fintechs choose specific products and features that will help customers and/or banks deliver better experiences. Digital transformation is a whole other ballgame.

What’s very interesting about our platform is that we work very closely with other fintechs and integrate them into our Marketplace solution to give our clients the choice of best-in-class fintechs from all over the world.

With our Open Digital Banking Platform, we offer banks and non-banks a fast, low-cost and low-risk alternative to core banking migrations. We fully digitalise a bank while at the same time, play matchmaker with the best-in-class Nigerian and global fintechs.

How would you describe the regulator’s activities in the sector? Are there more grounds you expect the apex regulator to cover?

We have witnessed increased activities and regulatory engagements within the fintech space. Between 2019 and 2020, Nigeria witnessed a major boost in its reputation as one of the leading African markets leveraging technology to democratise financial services, and the fintech space has continued to witness increased activity and engagement, both regulatory and otherwise. I think conventional banks will continue to face immense competition from the smaller fintech companies, telecommunications companies and other industry players within the fintech field in relation to the provision of financial services. I expect this to ultimately result in efficiency and the delivery of better service within the financial services sector.

What are the industry challenges you have observed that are peculiar to Nigeria?

Accelerating financial inclusion is one for sure. Having said that, regulators are doing a great job by continuing to roll out agent banking to boost financial services penetration across all parts of the country. By increasing efforts towards building financial literacy, UBA and Layer can communicate the benefits of digital solutions.

As 40% of the population is unbanked and a large chunk of the total population is credit invisible, it is imperative that we give these people access to financial services.

Much has already been done. There is much more to do, and we are very excited to help in any way we can.