By Nnamdi Azodo
Simple question. Difficult to answer.
I can assure you that banks themselves don’t have an answer to this question. The schools taught us that a bank is an institution who takes from the surplus end and gives same to the deficit end. But that was then. Today banks are something much more.
The Many Things a Bank is.
When was the last time you went to Multichoice’s office to pay for your DSTv subscription? And yes, we used to do that
In the no distant past, selling telephone recharge cards was a business. Some people built shops, installed air conditioners, decorated the shops and employed people to sell airtime! As I type this, my mind raced back trying to remember when I last bought airtime printed on paper. It was an effort in futility. I challenge you to remember when you last did. Why would you do that? No, seriously, why? When your bank is an airtime vendor and it’s right there on your mobile phone. You may login to your bank’s app and you have as much airtime as you want. Or you may simply dial *945# (or any of such USSD codes) and you have all the airtime you want. You don’t have to wait for the rain to stop falling. And you don’t need to pull out your umbrella
In 2014 when the Federal Government of Nigeria wanted a database of all account holders in the country, the banks were their vehicle to achieve that. The banks are a tool in the hand of the government to achieve certain policies
Facing falling oil prices and a treasury that was fast drying up, the government of Nigeria introduced “Stamp Duty” charge on deposits/transfers into certain account categories. Who was her tax collector? The banks!
Banks today also carry out some business advisory functions; helping other businesses manage and grow their businesses.
There are a million and one things banks do these days that it’s difficult to define what a bank is.
International or local intermediary for individuals and companies.
Safekeeping of valuables.
The list is almost endless.
Why Does This Matter?
It matters because, in an attempt to be everything to everyone, banks are gradually losing focus. The result? They are too distracted and are not noticing the coming Fintech Revolution. Combining technology with finance, some startups are gradually, but steadily, taking businesses from the banks.
They are not banks. They cannot compete directly with banks. So, they are attacking different business areas of banks. It is called “flank attack”.
In military tactics, an army (usually the underdog) flanks the enemy by attacking it on the sides as against head-on attack. If a flanking manoeuvre is successful, the opposing army is usually surrounded from two or more directions. That is exactly what Fintechs are doing to banks right now. They are flanking banks from the different sides especially payments and lending. Want some examples from the Nigerian banking landscape?
Aella Credit (lending)
On and on, the list goes.
No, the banks won’t disappear; at least not now. But they will be radically changed. Forever.
With the rising cost of doing business and declining margins, the banks have two options:
Narrowing their focus. You cannot be all things to all men. You cannot be the best retail, commercial and mortgage bank all at once! Choose your battles wisely.
Investing in Fintechs. This may be their most viable solution. The Fintech Revolution is here and if you cannot stop them, join them. Shikinah!!!
So, I will ask you again… What is a Bank?
Nnamdi Azodo is the product owner of ALAT Digital Bank