CBN: FinTechs not replacing banks’ roles

The Central Bank of Nigeria (CBN) has assured that Financial Technology (FinTech) companies will not take over the roles played by commercial banks in delivering services customers.

Speaking at the BiMonthly Forum of the Financial Correspondents Association of Nigeria (FICAN) in Lagos at the weekend, CBN Director, Banking and Payments System Department , ‘Dipo Fatokun said the demand for the services of FinTechs will continue to rise, however, they need commercial banks’ to enable them operate effectively.

Fatokun said the increasing roles of FinTech companies in the payment system will allow banks to focus more on their traditional roles of financial intermediation.

He said: “FinTechs have always been in existence, it is just that more prominence is being given to their roles. In some jurisdictions FinTechs are being allowed, or plans are under way to allow them connect to the central bank which, previously, was the exclusive preserve of the commercial banks,

“The fear has always be there that FinTechs will take over the roles of the banks and that a time will come when there will be no bank. Fintechs are not licenced as financial institutions, they cannot take deposits, they can make payments out of bank accounts. They can only facilitate payments or make it easier but the banks will still continue to play a very big role”.

Fatokun argues that Banks provide hundreds of services outside of payments. They open Letters of Credit, give out loans and you can only give loans if you take deposits. They banks provide guarantee, either an advance payment guarantee or a performance bond for contractors. “For you to do that, you need to be a licenced financial institution,” he added.