Conversely, if the pedal is solely a brake, the car would fail to reach its full potential. This analogy effectively illustrated the need for a balanced approach to foster innovation and digitization while ensuring security and regulatory compliance in the banking industry.
At the Nigeria Fintech Revolution Summit held recently under the theme “Unleashing the Power of FINTECH,” Head of Internal Audit at First Bank Nigeria Holdings Plc., Dr. Bode Oguntoke has provided valuable insights into the transformation of the Nigerian banking sector.
With a wealth of experience as a chartered accountant, business strategist, and risk and control manager, Dr. Oguntoke’s expertise in technology, cybersecurity, and process automation positions him as a key contributor to the further development of the financial services industry.
During his speech at the summit, Dr. Oguntoke emphasized the significant changes that have shaped the Nigerian banking landscape over the past few decades and shed light on its future trajectory. He outlined five distinct stages of transformation that have driven the evolution of the industry.
The first stage, known as “Manual Processing and Arm-Chair Banking,” was characterized by extensive paperwork, cash and cheque transactions, and lengthy cheque clearing times. Account types during this phase included savings, current, fixed deposit, and domiciliary accounts. Bank branches operated independently without interconnection, and international transactions were limited to decentralized traveler’s cheques.
The second stage, called “Semi-Manual and Mechanized Processing,” introduced adding and posting machines from renowned companies like Olivetti, Burromat, and IBM. Despite some mechanization, the banking system remained closed.
The third stage, “Computerized Processing and Introduction of Business Development,” witnessed the advent of computers, which brought operational efficiency, interconnection of branches, and automation of interbank settlement. Banks actively sought customers through marketing and product development, and innovative services like payment cards, ATMs, online banking, mobile banking, and USSD were introduced.
The fourth stage, “First Phase of Digital Banking and Entry of FINTECH,” marked the full automation of internal processes and the enhancement of alternative channels. This resulted in a significant improvement in customer experience, giving banks a competitive advantage. Intermediation tasks were licensed to other financial institutions and fintech companies, leading to the unbundling of banking activities.
Looking ahead, Dr. Oguntoke described the fifth stage, “Second Phase of Digital Banking and Full Disintermediation,” as the future of banking.
He envisioned a democratization of the banking business through platform-based services, API integration, and open banking. Customer ownership will be decentralized, and the use of traditional payment cards may diminish as payments can be made directly through platforms and chat applications like WhatsApp. The concept of banking will be redefined, moving away from a reliance on traditional banks.
Addressing the challenge of finding the right balance between innovation, digital transformation, security, and regulatory compliance, Dr. Oguntoke used a thought-provoking car analogy.
He urged the audience to imagine a high-capacity, luxurious car with just one pedal. If the pedal represents the accelerator alone, the car would be prone to danger and destruction without proper control.
Conversely, if the pedal is solely a brake, the car would fail to reach its full potential. This analogy effectively illustrated the need for a balanced approach to foster innovation and digitization while ensuring security and regulatory compliance in the banking industry.
Dr. Bode Oguntoke’s insightful presentation provided valuable perspectives on the past, present, and future of the Nigerian banking industry, setting the stage for continued discussions on the transformative power of fintech.