The Governor of Central Bank of Nigeria (CBN), Godwin Emefiele has attested to the role of digitization, automation and technological innovations in the financial sector, as reported by Guardian.
Speaking at the 19th National Seminar on Banking and Allied Matters for Judges, organized by the Chartered Institute of Bankers of Nigeria (CIBN); the CBN boss acknowledged the impact of technological innovation in every human sector including financial service delivery in the country.
Digitization has also spurred consumers’ increased demand for improved and more convenient experiences across the services that they use and demographic factors such as the growing financial influence of younger generation aptly referred to as digital natives are driving demand.”
“Digital finance can deliver enormous benefits, not just for the payments system but also for the financial well-being of the citizenry and the economy at large. It improves competition, increases efficiency and revolutionizes financial services.”
Mr. Emefiele noted that these innovations such as robotics, artificial intelligence (AI), and blockchain technology will further disrupt the financial service sector; as he admitted to the evolution in digital finance, financial technology (Fintech) and their impact in disrupting the traditional banking models.
The Central Bank boss, however, cautioned that while this digitization of financial services offers numerous benefits to consumers, they pose a significant risk to the financial industry. He highlighted the cases of cyber-attacks which he says should be curbed to avoid escalation, through polices which will favor both innovations as well as offer a way to manage the risk they pose.
Also speaking on the matter, President and Chairman of Council, Chartered Institute of Bankers of Nigeria (CBIN), Uche Olowu described technology and digitization as the game changers in financial service delivery; while also querying the lack of adequate legal and socio-economic framework to keep pace with ethics of the industry.
He stated: “The global emergence of technology and digital-driven initiatives such as crypto-currency, AI, blockchain, and open banking, aimed at customer incentivization and efficiency has enlarged the scope of rendering financial services beyond the traditional model and is creating opportunities for non- bank organizations to offer financial services with fewer regulations.
“In Nigeria, the growth of our financial landscape through the adoption of technological and digital-driven innovations is unprecedented. We are currently experiencing a paradigm shift from the traditional banking approach to a digital banking service model leveraging on technology.”
An Emerging Industry
Both comments further highlight the evolution of finance from traditional fiat-money systems to emerging industries championed by blockchain technology, artificial intelligence, and other innovations.
In Nigeria and on a global scale, there has been a rise in fintech innovations aimed at easy, convenient and transparent financial management. Most of the new systems are linked to fiat money systems or related activities which still lag behind in some aspects.
For cryptocurrency and blockchain technology, mainstream adoption is gradually stemming from the use-cases of both currency and technology on a rise. Both systems offer benefits over traditional finance but critics and a lack of education have hindered its spread.
While there are concerns about potential risks to customers, these new technologies are in an early phase and have the potential to get better and provide more solutions over time.