Frontline African technology firm, SystemSpecs, has lauded the efforts of Nigerian fintechs as intermediaries in financial transactions using cutting-edge innovations and consumer-oriented solutions.

Speaking on Fintechs and Changes in Financial Intermediation, Demola Igbalajobi, an Executive Director of SystemSpecs, made the above assertion at the Information Technology (IT) and consulting webinar hosted by the Institute of Chattered Accountants of Nigeria (ICAN) recently.

A financial intermediary is an entity that acts as the middleman between two parties in a financial transaction. They are meant to serve as a bridge in complex financial transactions and take a fee as compensation for the risk involved.

Igbalajobi, who was represented by the SystemSpecs’ Head of Payments Technology and Infrastructure, Mujib Ishola, stated that fintechs have become an alternative in the financial intermediation process traditionally performed by banks and other licenced money handlers.

“Fintechs are making inroads due to a number of factors including their agility and speed to market, less risk-aversion, focus on service rather than regulation, and the current inefficiencies in the operations of traditional banks,” he said.

He added that the rapid growth of digital technology innovation has led to the rise of fintech platforms, facilitating solutions in several areas including mobile money, insurtech, agrictech, crypto transactions, and many others.

“Fintech can be operators that provide direct services to customers. They can provide platforms as a service, develop platforms for other financial entities, or serve as a support platform for ancillary services such as data referencing, data verification, and collection,” he said.

More so, fintechs are focussing on specific areas of customer needs, such as payment, lending, or verification, unlike traditional banks who provide different types of financial services from a single platform.

Armed with the power of modern technology, the tech expert stressed that fintechs aim to replace the current framework of licenced intermediaries and trusted central gatekeepers.

Igbalajobi said there are still areas of concern as fintech platforms become ever more important as facilitators of financial transactions.

“These include the need for fintech specific regulations as well as compliance with the various regulators in the system such as the Central Bank of Nigeria (CBN), Securities Exchange Commission (SEC), and the General Data Protection Regulation (GDPR). There are also need for data privacy, data security and stability of the fintech companies themselves, to reduce risk to consumers,” he said.

Predicting evolving trends in the fintech space, he said there will be more collaborations between fintechs and traditional financial institutions, open banking, artificial Intelligence (AI) and web automation.

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