Payment is a critical part of human existence. It is an important trade enabler, so far as humans continue to exchange goods and services at a value. In today’s rapidly evolving payment landscape, the role of technology in reshaping payment services cannot be overstated. Fintech companies have emerged as key players, disrupting and innovating the way we carry out transactions.
Amidst this transformative journey is the need for industry players to come together and collaborate to remain profitable as well as grow the ecosystem. However, with payment being an integral part of every business, critical players across the verticals should be cultivated with the intent to increase profitability, ensure sustainability, grow the payment ecosystem and consequently grow the economy.
Our current realities across the business operating landscapes and the economy in general, call for a reimagining of how industry players view themselves. In the digital payment space, critical players such as banks, fintechs, technology companies and even telcos should deliberately edge towards collaboration rather than competing.
At the second edition of the Nigeria Fintech Forum held recently, industry players drawn from banks, fintechs, micro-finance banks, telcos and other financial institutions gathered to discuss how to strengthen the digital payment landscape. Emerging trends discussed included cross-border payments, embedded finance, lending, regulation etc, however, a key trend identified and reiterated was the need for co-opting instead of competing. Collaboration was identified as a key driver to achieving the financial inclusion goals.
While it was the norm for players offering similar services within an industry to see themselves as competitors, we are increasingly witnessing similar service providers partnering to provide solutions that meet their customers’ growing needs. An example of such a partnership is the recent First Bank Plc and Opay partnership, where both organisations are integrating their APIs onto each other’s platforms to enable their customers to transact faster and more conveniently.
There is also the example of players across the verticals partnering to develop solutions that are driving innovation in the industry. Recently, a quartet of Interswitch Group, Mastercard, Thales and Providus Bank came together to introduce an innovative payment solution into the Nigerian market. The solution called tokenisation allows Providus Bank customers to make fast, secure, and convenient in-store payments by tapping their NFC-enabled smart device at any contactless-enabled payment terminal.
The solution enables a connected device such as a smartphone or wearable device to act as a physical card, eliminating the need for a card or physical wallet. With the tokenization technology, primary account numbers (PANs) are replaced with tokens thereby rendering card numbers useless to fraudsters. This single solution eliminates physical card, physical wallet, and card fraud.
Moreover, the investment required to deliver modern and cutting-edge digital payment solutions is humongous and capital-intensive for individual banks, fintech or technology companies to take on solely.
These investments can come in the form of cost of research, infrastructure, product development and human resources. With each player providing any or all of this requisite investment, the rate of growth will be slow, and the services and products will remain in silos, keeping the market fragmented while also making it difficult to scale such products and solutions across the board.
However, by leveraging collaboration to bring more players together, there will be economies of scale where the cost will be shared, diverse knowledge and expertise will be leveraged, products and services will be scaled faster across the market and growth will be quickly realized than envisioned.
Steve Jobs captured it succinctly when he opined that “Great things in business are never done by one person; they’re done by a team of people.” This statement further reiterates why all hands must be on deck to help build sustainable businesses and transform the payment landscape.
The need for collaboration cannot be overemphasized. However, the collaborating partners should look beyond avenues for mutual growth and explore opportunities to design innovative products that cater to the growing needs of the customers, enhance user experience as well as grow the ecosystem for all the players. In the final analysis of the matter, the bigger the pie, the larger the share for everyone.
Ikechukwu Ugwu is a seasoned marketing professional with a passion for growing the digital payment landscape throughout Africa. He has extensive multi-sector experience and is a proven Growth Marketing Leader. Ugwu is currently the Group Head, Growth marketing (Enterprise) at Interswitch Group. He writes from Lagos.