BusinessDay 24 Aug 2018

Friday 24 August 2018 C002D5556 BUSINESS DAY 19
FINTECH
News Products Review Technology Review Personality Review Company Review
COMPANY REVIEW
What’s the future of physical bank branches?
Stories by FRANK ELEANYA
One of the notable
achievements
of financial
technology
(Fintech) is the
speed of adapting to the new
location of the 21st century
customer. The consequence
of a social media boom is that
people spend less time offline
and more time online.
The growth of mobile
phones has also contributed
significantly to this migration
from physical places to virtual
platforms.
The number of mobile
subscribers in Nigeria reached
150 million and internet users
went up 97.2 million in 2017,
according to a data from Jumia,
Nigeria’s largest online
retailer. Jumia said the growth
was driven by the availability
of lower point phones that
enabled more Nigerians to
own a mobile device. It also
revealed that Nigeria has 21
million smartphones.
For Fintech businesses and
players, the numbers repre-
sent immense opportunities
for growth. A major staple of
fintech is the development
of new financial technology
products and services that are
not limited by physical spaces.
Fintech companies utilise
technology as widely available
as payment applications
to more complex software
applications such as artificial
intelligence and big data.
Unlike traditional financial
institutions, fintech businesses
are nimble, flexible
and aim at providing the
most convenient service to
customers. These services
have so revolutionised the
way people perceive banking
that even banks are adapting
and playing at the front end
of fintech in Nigeria. As the
banks embrace fintech, the
physical branches that used
to host a lot of people are
thinning out.
“We are a digital bank,
which means we don’t have
physical branches (because
you won’t need them),” ALAT,
the fintech arm of the decades
old bank Wema Bank
Plc, boldly declared recently.
“You’ll be able to do everything
(sign up, request and
activate a debit card, pay and
save), on your phone.”
ALAT’s sentiments on
physical branches have also
been echoed by GTBank’s
CEO Segun Agbaje. At the
Social Media Week in Lagos
in 2017, he noted that the
bank is already planning for
a future where 90 per cent of
customers’ needs will be done
through mobile phones.
Nearly all the Nigerian
banks now have financial digital
strategy and are leveraging
new social platforms to bring
services closer to customers.
Safe to say each is making
plans for a future where online
controls the largest share of
their revenue activities.
What does the future hold
for physical branches then?
“By 2020, we expect to have
physical branches handling
no transactions but just advisory
services to our customers,”
James Mwangi, CEO of
Equity Bank said at a recent
conference in Kenya where
it also launched its fintech
subsidiary, Finserve Africa
Limited in August.
While physical bank
branches will continue to
experience less and less customers,
it might take a little
longer time – if at all – for
them to become a relic for the
museum. While the threat of
fintech is real, what may never
change is the customers need
for physical contact.
Financial advisory is a
field that is getting more attention
from financial institutions.
Earlier this year, to the
surprise of many analysts,
JPMorgan Chase announced
plans to open 400 new bank
branches. The branches which
will be rolling out in October,
is aimed at offering advisory
services to small businesses.
According to some experts
entrepreneurs place more
value on in-person advisory
relationships they get when
they visit bank representatives
in person.
TECHNOLOGY REVIEW
Bitcoin ETF: What it is and not
Anxiety over the
outcome of two
bitcoin-based
exchange traded
funds (ETFs) set to be decided
by the US Securities
and Exchange Commission
(SEC) has the entire virtual
currency world on high alert.
Whatever the decision is
could have a deep impact on
the direction of the market
going forward.
Investors who are anticipating
a positive decision
are already taking their positions,
leading to a 15-day
spectively.
The SEC’s decision on Pro-
Shares Bitcoin ETF and the
ProsShares Short ETF is expected
on Thursday, August
23. Coindesk explains that
the ProShares ETF proposals
– initially submitted to the
SEC last December – are underpinned
by bitcoin futures
contracts, rather than any
physical holdings of bitcoin
itself. In essence, the ETF’s
value will be determined by
the bitcoin futures contracts
trading on CME or the Cboe
Futures Exchange, according
to the original filing.
What Bitcoin ETF is
An exchange traded fund
(ETF) refers to a marketable
security that tracks an index
of funds, a commodity, or
a basket of assets. An ETF
trades like a stock on the Nigerian
Stock Exchange (NSE)
for example, but not with the
same degree of risk.
It is considered the future
of virtual currencies like bitcoin.
Prior to now, to trade
bitcoin you must own a wallet
with actual bitcoins depos-
surge in the price of bitcoin
on Wednesday.
Back in Nigeria, the confidence
in a favourable decision
seem not so high as
volume of transactions in
the second and third week of
August are yet to hit the highs
they did on the first week according
to the LocalBitcoin
index. The first week saw
transaction volume reach
N1.6 billion from N1.5 billion
the previous week. However,
the second and third weeks
have hovered around N1.3
billion and N1.44 billion reited
in it. But the ETF makes
it possible for a people who
do not want to own bitcoin
to trade in bitcoin and make
profit from it. Buying a share
of an ETF means you do not
actually own the underlying
asset (bitcoin), rather you
own a piece of the fund, how
the fund is structured and
where the money is going.
What Bitcoin ETF is not
It is not a regulation on the
entire bitcoin market. This
could be where the problem
lies for the SEC. Approving
an ETF means a high level
of regulation. In the case of
bitcoin ETF, SEC will only
be regulating a part of the
highly volatile market they
have control over but not the
entire market which is still
unregulated.
“If the bitcoin ETF is approved
this week, the bear
market will probably end,”
Vinny Lingham, CEO of Civic
Key said on Twitter. “I think
there is a less than 20 per cent
chance of the approval happening,
but it certainly would
be a very bullish signal.”