Banks outsource payment gateway services to Fintech
SOME money deposit banks have started the outsourcing of their payment gateway services to payment platform providers, in a bid to ensure efficient service delivery and focus on traditional banking services.
Banks in the country as part of their services provide payment gateway for merchants who sign up with them to be able to receive payment through point of sale terminal, internet among other electronic payment channels.
But Zenith bank and Flutterwave, a financial technology services provider, recently inked an agreement to allow the bank to sign up merchants for the service while Flutterwave provide the payment gateway to ensure that the sign up merchants get payments through the various e-payment channels.
Reacting to this developments, Tunde Ogungbade, managing director, Global Accelerex , said that it is an expected and a welcomed development.
“Banks and other financial institutions need Fintech companies and Fintech companies cannot exist without Banks. It is a symbiotic relationship. The Banks and OFIS have the regulatory experience, operational expertise, business risk management and customer trust that have been built over decades and for some, even over a century.
“Fintechs bring the information technology agility and new business models, among other offering to enable Banks identify, grow and reach new market segment or serve exist ones at a low cost structure by using modern business computing platform to complement existing core banking platforms.
“Fintechs also serve as that research and development side of a bank to experiment with new products, services or solutions tailored to various segments without the need to modify stable and functioning core banking which are costly and risk prone.
“As more banks and Fintech see this relationship as a complementary rather that a competitive one, there will be more outsourcing agreements beyond payment that will be a win-win for both sides. This is assuming there is no desire for customer ownership and control, or holding store value (money) on the part of the Fintech, which are critical to the identity and functions of Banks,” he said.
Corroborating Ogungbade, James Agada, managing director, CWG, said that such arrangement will save banks from making further investment in technology as well as maintenance of the infrastructure.
“I see more of such arrangement coming in the industry. I don’t think any bank would want to stop the trend,” he said.
A payment gateway is a merchant service offering that is provided by a Payment Service Provider either directly to merchant or in partnership with a bank.