GTBank Chief Executive Officer (CEO) Segun Agbaje, says the emergence of Fintech and Network Providers in the banking sector doesn’t frighten him despite their disruption of the banking industry.
Agbaje made this comment following a question from Nairametrics analyst Olalekan Fakoyejo at a session at the Social Media Week 2020 held at Landmark Event Center.
FinTech companies operating in the banking space are often termed “Neo banks” or “Challenger Banks” and have disrupted the sector all over the world with innovation and faster route to market.
He stated that winning the digital payment race is more than just possessing the best of technology. While Agbaje admitted that the fintech and telecommunications companies are pulling their weight and making inroads into the banking space, their presence poses no threat to him and GTBank.
Agbaje emphatically responded, “I have no fear for Telcos; we are ready for Telcos. All we ask for is an equal level playing field.”
There have been arguments as to which sector or firms will dominate the mobile payment market after the Central Bank of Nigeria (CBN) began to offer licenses to fintechs and network providers in order to ensure the growth of financial inclusion.
Currently, the digital payment market is saturated by several digital payment firms, but during his presentation, Agbaje identified the likes of OPay, PayPal, Cowrywise, Piggybank, MTN, Square, Monzo, Venmo, Cash App, Apple Pay, and Monzo as rivals that are exploiting the growing disconnect between the traditional banks’ services and the evolving customer needs.
Though public sentiment is in favour of the Fintechs and Telcos triumphing over the traditional banks, for Agbaje, anybody with the ability to leverage digital technology can become banks’ competitor.
Why is Agbaje not fearful of disruptors?
According to the GTBank boss, winning the digital payment race or dominating the market is beyond just acquiring the best of technology, because technology will become a commodity available to all.
“I will take a leap of faith today. The easy answer will be for me to say to you, the best who has the best technology will win, but I will be lying to you because technology will become a commodity… So technology will never be the differentiator,” Agbaje stated.
He affirmed that the race would be won by the company using the best technology to offer the best of customer experience. This would result in customer loyalty and cause loyalty switch in the customer base of the digital payment market. “Today, customers don’t want service, they want experience,” Agbaje said.
“So the person that is going to win, whether its fintech, telco or bank, is the one built by technology but that can still give you that feeling that there are people who care about you, that this organisation cares about you.
“Whoever can give you that feeling on a digital platform is who is going to win,” Agbaje said while declaring that GTBank would win because of the digital products the bank possessed.
Should disruptors be afraid of GTBank?
Nairametrics learnt that while some traditional banks are stuck in the past or dragging their feet as technology evolves, GTBank appears to be ahead in the fight against disruptors. GTPay is competing in the payment system, GTCollections is also competing in the Aggregator’s market. GTBank is involved in Issuers and Acquirers market, while GTMoney Transfer is ruffling feathers in IMTOs. In the e-commerce and entertainment space as well, GTBank has Habari.
Also, the bank has been crashing lending rate to stifle competition. GTBank reduced its ‘Quick Credit’ interest rate on loans to 1.33 per cent per month from 1.75 per cent, making it one of the lowest lending rates in a space that still has some rivals offering interest rates as high as 7 per cent.
Aside from financial products, one of the ways GTBank is plugging into the customer base is through organising events that associate with personal and business needs of Nigerians. The bank deepens its retail service through events like GTBank Fashion Week, GTBank Food and Drinks, Lagos State Principal Cup, amongst many others.
Opportunities exist everywhere
Agbaje explained that opportunities are not limited to one country, as Sub-Saharan Africa’s digital payment space still possesses enough potentials and could grow to $16 billion annually in the next few years, according to McKinsey.
In Nigeria alone, penetration rate is just 13 per cent, while Kenya has the highest at 68 per cent. So Africa would remain the frontier for platform-based payment. He pointed out that Africa’s young population would also drive competition.
Agbaje explained that Africa has a very young population which is industrious and tech-savvy, so the payment space would keep growing astronomically. He added that small and medium Enterprises (SME) is also a key component that would make the market viable. He disclosed that with over 180 million SMEs in Africa, over 4.5 billion transactions have been made by SME.
Agbaje on job loss scare
With banks reviewing their business models to accommodate technology advancement, there are fears that the eradication of traditional banking system could lead to job loss.
Technology has been projected to take over 30 per cent of bank jobs, but Agbaje said there’s no cause for alarm because as technology expands bank services, so will job opportunities be created. He said banks can’t remain stagnant because of job loss scare; the bank needs to evolve.