With the end of the year approaching, the amount of forecasts for 2017 is steadily increasing. How will the local FinTech industry develop and what will be the next big thing?
One can foresee the next Fintech trends more realistically by looking at the current developments. Exactly, they will determine the course for the next year. Seven areas are of special interest.
1. QR Code Payments
QR code payments will effectively take off in Nigeria’s financial market in 2017. In 2016, the market witnessed the entrant of Access Bank’s PayByCapture and MasterCard’s Masterpass with minimal impact. VISA will definitely join the fray early in 2017 while local biggies –Interswitch and Remita – are working very hard to fight for market share. This market will be very interesting. However, interoperability and standardization may be the biggest challenge for fast adoption.
The success of GTBank X737x USSD powered payment system in 2016 will encourage a lot of innovation on the platform in 2017 and beyond.
USSD (Unstructured Supplementary Service Data) is a Global System for Mobile (GSM) communication technology that is used to send text between a mobile phone and an application program in the network.
The NIBSS-powered micro cash (mCash) platform is layered on USSD. Even most QR code payments integrate the USSD option to target the G2 customers. Remita may also layer some of its payment and collection solutions on bank’s USSD platforms.
The Nigerian Communications Commission (NCC) has also promised to put in place a friendly USSD’s tariff regime in 2017 to encourage financial inclusion project of the federal government.
With the increasing consumers’ trust of the payment networks, contactless may likely sneak into the payment market in 2017.
4. Hyper competition in POS business
With the eventual take off of the deregulated Merchant Service Charge (MSC) in 2017, I foresee a cut-throat competition among the banks in the troubled POS market. With the new regime, the banks are empowered to determine the MSC with their merchants.
Most banks are likely to adopt zero MSC charge to gain market share as deposits still make up the highest percentage of fund sources for the banks.
5. T+1 may become history
With most payment platforms like USSD and QR code adopting instant payment settlement for the merchants, T+1 will be gradually phased-out from the market in 2017. If your acquiring solutions cannot give instant payments and settlements for your merchants, you may have to start re-working your process now as the market will be hostile to you in 2017. Even cheque truncation will likely embrace instant clearance in 2017.
6. Flexible regulations
In order to promote financial inclusion, I foresee CBN becoming more flexible in most of its pro-bank regulations in 2017. The regulator having granted no objection to MasterCard and VISA on Person to Person (P2P) payments in the country, the big wall is already falling; I see some of the pro-banking regulation being discarded in 2017.
I foresee CBN toying with an idea of e-money regulation in 2017.
7. Digital Currency
In response to the popularity of unregulated ponzi scheme like, Mavrodi Mudial Moneybox, MMM, I foresee CBN and Nigeria Deposit Insurance Commission (NDIC) adopting a digital currency regulation in 2017. This is the only way such scheme can be regulated.