Traditional Banks in Africa Hold Trust Advantage Over Fintechs – Fintech Bitcoin News

A recent report by CR2 on Africa’s fintech transformation suggests traditional financial institutions can still be a part of the fintech financial revolution if they leverage one of their most significant assets: client trust.

Banks and Fintechs Form Partnerships

Financial institutions who want to make a rapid progress in fintech should form partnerships with technology startups and companies. Having such partnerships, as well as their longstanding client networks and more defined regulatory environment, means financial institutions can still grow their share of Africa’s digital market.

The story about how one Nigerian bank lost its clients when its mobile banking system went down illustrates just how important it is to collaborate between banks and fintech. The report then contrasts GTB’s misfortunes with the rise of the VC-backed fintech startup Kudabank, which saw its customer base rise from 300,000 to 1.4 million in less than three years.

The report argues however that traditional financial institutions are still able to compete with VC-backed startups if it is possible for them to use their greatest asset, client trust. McKinsey Consulting conducted a Nigerian fintech study to support this perception of client trust.

Trust is the Key

The study found that 67% of Nigerian bank customers had greater trust in banks than they did in fintechs. Although the findings of this study showed that Nigerian banks sometimes made errors, they still have a lot of consumers who are hesitant to move to fintech. Access and convenience are both important factors for customers. However, financial institutions have the advantage because they can trust their customers.

In conclusion, the CR2 report urges banks to seize the opportunity to grow their share of Africa’s digital finance market. This is what the report states:

“Longstanding financial institutions must respond with innovation services built through collaboration with enabling digital banking platform partners. Those banks that pair their customer trust advantage to novel innovation on the product and platform side stand to excel in Africa’s 21st-century fintech landscape.”

What do you think is more trustworthy, banks of the past or startups in fintech? Let us know what you think by leaving comments below.

Image creditShutterstock. Pixabay. Wiki Commons

DisclaimerThis article serves informational purposes. It does not constitute an offer, solicitation, or recommendation of any company, products or services. is not a provider of investment, tax, legal or accounting advice. The author and the company are not responsible for any loss or damage caused by the content or use of any goods, services, or information mentioned in the article.

Get more Crypto News at CFX Magazine