According to a recent World Bank report, it revealed that Fintechs can play a crucial role in bridging Nigeria’s financial inclusion gap, particularly in rural and underserved areas.
The global bank revealed that Nigeria’s fintech sector makes up about one-third of Africa’s financial services market, which is predicted to grow at about 10 percent per annum, reaching about $230 billion in revenues by 2025.
As the fastest-growing start-up industry in Africa, the success of fintech companies is being fueled by several trends, which include increasing smartphone ownership, as well as a young, fast-growing, and rapidly urbanizing population.
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Despite the growth of Fintechs, the World Bank disclosed that about half of Nigeria’s adults remain unbanked or underserved, primarily due to limitations of traditional banking infrastructure. “This is especially true in rural and underserved areas, where physical bank branches are scarce or nonexistent”, the bank stated.
The global bank report highlights that nearly 50% of Nigerian adults fall into the unbanked or underserved category. It further highlights Quickteller Paypoint, an agency banking launched by Interswitch, as a key enabler of financial inclusion.
It is worth noting that Agency banking in Nigeria plays a crucial role in promoting financial inclusion by bringing financial services closer to the underserved and unbanked populations.
Here are some key ways in which agency banking aids financial inclusion in Nigeria;
Access to Financial Services:
Agency banking brings banking services to rural and remote areas where traditional bank branches are not available. Agents operate in local communities, making it easier for individuals to access banking services without traveling long distances.
Convenience:
Agency Banking offers services such as cash deposits and withdrawals, bill payments, fund transfers, and account opening. This convenience encourages more people to use formal financial services.
Cost-Effective Operations:
Operating through agents is more cost-effective for banks than establishing physical branches, allowing banks to serve low-income customers more economically.
Overall, agency banking is a pivotal component of Nigeria’s strategy to achieve comprehensive financial inclusion, empowering millions of Nigerians with access to essential financial services.
Notably, to reach a much larger client base, the World Bank disclosed that Fintechs are collaborating with traditional banks to tailor services to the evolving needs of Nigerian consumers and businesses.
These collaborations leverage the strengths of both parties, with banks’ established customer bases, regulatory compliance, and infrastructure and Fintech’s agility, innovative solutions, and technological expertise to provide financial services. This collaboration offers numerous benefits which include; Enhanced Innovation, Increased Reach, and Improve customer experience.
Overall, the collaboration between Fintechs and banks in Nigeria is fostering a more inclusive, innovative, and efficient financial ecosystem, benefiting consumers and businesses alike.