Banks and Fintechs Can Co-exist Under A Smart Regulatory Regime in West Africa

Good observation: “The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has expressed concern over the rising volume of non-bank transactions which he says poses a major threat to financial stability in West Africa.” 

Yet, we should not go after fintechs with high-voltage regulations. They offer great value and actually make the banks better!  My suggestion is to execute a nuanced balancing policy, picking some lessons from China. Simply, do what China did when their local banks were having challenges due to Alipay and WeChat. 

Yes, all fintech settled account balances cannot stay in fintech wallets after 72 hours, thereby making sure the funds are warehoused in banks. Those local banks need the funds to serve local communities. By doing that, you ensure the fintechs are mere transaction ecosystems, fixing frictions on distributions, but not as a vehicle to hold value in perpetuity.

We need the fintechs and we also need the banks to be strong. Study how China handled this, and we can allow both to breathe, modifying the lessons learned for our local peculiarities.