Fintech needed to achieve financial inclusion, says former MTN CEO, Adebiyi

Adekunle Adebiyi, a former MTN executive and current Chief Commercial Officer in Itex Integrated Services Ltd, has described traditional banking and fintech as two sides of the same coin, noting that to achieve financial inclusion, financial technology must be used.

Adebiyi said this while speaking on the impact of fintech and Nigeria’s economic inclusion goals, in a recent interview on a Lagos radio station, Nigeria Info FM.

Adebiyi shed light on the role of fintech in the country’s financial inclusion strategy and how a focus on rural distribution can help reach more unbanked Nigerians.

“Fintechs are partnering with traditional banks to improve the sustainability and accessibility of the services they offer to the public. Because of this, distribution is critical if we are to reach unbanked Nigerians. Rural areas, where more unbanked people live, must become the focus instead of metropolitan areas and semi-urban areas As a country, we have made progress towards financial inclusion, but if we are to achieve our goal, we need to use financial technology.

“Country communities continue to suffer as banks cut operating costs by reducing the number of ATMs and branches, focusing instead on getting more customers to embrace digital banking through smartphones.

“Yet 40 percent of adults living in rural areas have no formal bank account and limited smartphone access. Fortunately, PoS terminals and mobile money agents are on the rise, providing financial services and in some cases acting as an agent through which the unbanked can open tier 1 bank accounts that only require passport photos. It was important to understand that traditional banking and fintech were both sides of the same coin.

“Traditional banking and financial technology is not on either side of the divide; I see a convergence. Fintech is about using technology to improve the process of financing, making it easier, accessible and sustainable. For example, Itex has made it easier to buy electricity bills; with a mobile device you can top up and pay for electricity without leaving the comfort of your home, that is the effect of financial technology.”

Although Nigeria has the largest economy in Africa and is home to five of Africa’s seven unicorns, the financial inclusion target as set out in the National Financial Inclusion Strategy (Revised) in 2018 had a target of reaching 80% financial inclusion by the year 2020, but only 64% of Nigerian adults were financially included by the end of 2020.

According to the World Bank’s 2021 Global Findex, Nigeria was one of seven nations that contributed half of the world’s unbanked population.

By the end of 2021, the number of financially excluded people in Nigeria was estimated to be 38 million, although the gap between banked and unbanked people has narrowed since 2011. These figures are not surprising given that 47.25 percent of the Nigerian population lives on rural areas and cannot get effective financial services because most traditional banks do not have extensive branch networks.

However, Nigeria is gradually reducing the gap between the banked and unbanked, and the Central Bank of Nigeria’s goal of financial inclusion no longer feels like a distant dream since the rise of fintech and agent banking in the financial sector.

Following the covid-19 pandemic, digital financial transactions increased by 325 percent to 704.04 trillion in 2020 from 165.8 trillion in 2019. According to NIBSS data as of August 2022, the volume of financial transactions in a month had reached an all-time high , totaling ₦238.7 trillion. Nigerians may support the CBN’s cashless strategy, but that does not necessarily mean that the unbanked have increased access to these financial services. As a result, fintech is crucial in Nigeria’s efforts to achieve financial inclusion.

The Central Bank of Nigeria has set a target of reaching 95 percent financial inclusion by 2040. With innovations led by fintech, a rise in mobile money operators, the recent increase in Nigeria’s financial inclusion rate and collaboration among stakeholders, the target is not nearly as unattainable as it may have seemed years ago.