A recent report by KPMG titled ‘In Pursuit of Value’ reveals a substantial shift in the adoption of FinTech services by Nigerians in 2023, attributed to challenges faced by major banks during a cash crunch period.
This growth notably benefited payment service firms like Opay, Palmpay, and Moniepoint.
The report highlights parallels between Nigerian and Ghanaian financial markets, emphasizing increased digital adoption, high mobile money penetration in Ghana, and the expanding role of FinTechs in Nigeria’s banking landscape.
During the cash crunch, which affected banking services and the wider economy, the report notes a significant move from ATMs to agency banking.
Surprisingly, 58% of respondents switched allegiance from traditional banks to FinTechs during this period, marking a substantial increase from the 15% reported in 2022.
The survey also indicates a surge in digital payments, with a remarkable 52% increase in total NIBSS Instant Payment (NIP) transactions by October 2023 compared to January of the same year.
The accelerated adoption of FinTechs, driven by the growth of major payment service firms due to the CBN policy on the naira, led to this significant shift.
The impact of the cash crunch is evident in the decline of weekly ATM usage, dropping from 70% in previous years to 40% in 2023. This decline aligns with a notable rise in agency banking usage, with six in ten customers now frequenting bank agents every week.
The report underlines the importance for banks to address customer feedback, including concerns about elevated agent fees, unresolved payment issues, and subpar customer service at these agent locations.
As FinTechs gain momentum, traditional banks face a changing landscape and evolving customer preferences.
