The advent of fintech has brought myriads of disruptions to the financial sector globally as they rapidly spread their tentacles across the financial market space. Let’s take some time to explain digital business for better understanding.
To accurately shed more on the subject of ‘digital business’, we will define the terms involved. We all know “business” is simply engagement in commercial activities. The term “business” also refers to the organized efforts and activities of individuals to produce and sell goods and services for profit.
Consequently, “Digital Business” is a platform created on a technological base to create new value in business models, customer experiences and the internal capabilities that support its core operations. Most businesses are building their presence digitally. Buying and selling digitally, however, create avenues for digital financial businesses thrives.
Recently, mobile money is gaining recognition as it is majorly popularised with its gradual success and impact across Africa. For instance, M-Pesa in Kenya and other telecommunication mobile money are making it easier for commercial transactions digitally. If you consider the structure of telcos, they have the brand recognition, scale, the distribution, data, cash, and can also meet the regulatory requirements similar to those that are required of the banks. These telcos do not only have the advantages that the banks have, they even have stronger inherent advantages.
Let’s consider some of these advantages one by one:
- Large customer base
- Network effects
- Large cash base
- Strong and reliable
- data
Should the banks be concerned?
Segun Agbaje the CEO of Guaranty Trust Bank, while addressing a church congregation at This Present House (TPH) in Lekki, Lagos, on the 6th of April, 2016. He made a speech about disruptions in the banking space. He said,
I confront disruptive technology for survival. I will never sit down and let other people take what I believe is my own business and my own market share. So if you think you’re Paypal or Apple Pay and I’m going to sit back, no, I will do *737 simple banking for every Nigerian and for every dollar or naira you spend, I will spend as well. But I will not give up my market space.
I think this is something every bank should really be thinking about because fintechs are not relenting in their drive to takeover financial services. Across the continent, fintechs are creating a raft of tech-based products and solutions, including mobile money, online payment processing, lending, and investing, these startups are plugging large gaps that exist in local financial service industries.