Working hand-in-hand, banks and financial technology firms (fintechs) can co-exist and successfully design solutions which not only meet customer needs but also ensure their survival amid the ongoing economic crisis.

The two have often been seen as competitors, but that notion has been dispelled by Chief Executive Officer of the Ghana Interbank Payment and Settlement Systems (GhIPSS), Archie Hesse, and Chief Executive Officer of the Ghana Association of Banks (GAB), John Awuah, who insisted that collaboration, not rivalry, is the key to unlocking mutually beneficial opportunities.

“Fintechs cannot be effective alone or by working in silos. Instead of heated competition with other stakeholders, there is a need to forge partnerships that achieve universal access to financial services. A collaborative approach will also benefit fintechs, banks, EMIs and, most importantly, the underserved,” Mr. Hesse stated.

He spoke at the 2022 Ghana Fintech Awards in Accra, and said the nascent fintech space – with the support of other financial stakeholders – has made significant strides in digital payments; with rapid progress over the last decade, which he said has been propelled by the COVID-19 pandemic.

The impact of this progress, he added, is visible in the increased levels of financial inclusion and related economic empowerment. For instance, in the recently published Global Findex Report by the World Bank, Ghana’s inclusion rate stood at 68 percent as at December 2021… increasing by 10 percent since 2017.

“This growth trajectory is predicated on technological gains in the financial services sector, created by a resilient digital ecosystem that is innovative, inclusive and anchored by a visionary and responsive regulatory environment,” he stated.

This, he added, can further be enhanced by a collaborative effort targetting unserved and underserved segments of the population.

He said that fintech firms play a key role in the financial services sector, and that passage of the Payment Systems and Services Act 2019 (Act 987) and establishment of the Fintech and Innovation Office by Bank of Ghana seek to, among other things, structure the ecosystem to allow them play an even more import part in the economy as well as enhance collaboration.

For Mr. Awuah, evolving customer needs and the ever-changing face of the financial services sector requires much greater collaboration between banks and fintechs. Through partnership, he said, the two can develop sustainable financial solutions and unlock new frontiers for growth.

Mr. Awuah, who also spoke at the same event, said it is high time banks and fintechs saw each as partners. He added that much more still needs to be done to enhance the regulatory and policy frameworks, so as to improve competitiveness and efficiency in the national financial system.

Over-regulation killing growth of fintechs

Meanwhile, progress in promoting financial inclusion and digitisation could be undermined by excessive regulation of the financial technology space, according to industry players.

While reasonable regulation is key to healthy competition, growth and development, players are of the view that too much of it can be counterproductive: by stifling innovation and serving as a barrier for new entrants.

“Regulations are still tight, and I would call on regulators to soften the regulations and allow fintechs to grow. The only way we can get more fintechs, more financial companies and new ideas coming through, is to reduce the threshold for regulation,” Growth Africa Director for Taptap Send, Darryl Koku Mawutor Abraham, told the B&FT on the awards’ sidelines in Accra.

“If we fail to do this, what happens normally is that people run away because regulation becomes a barrier to entry. So, it means that they [fintech firms] cannot innovate and bring up new ideas,” stated Mr. Mawutor, who described the current regulatory regime as “one of the toughest barriers” to entry in the fintech ecosystem.

Similarly, Country Manager of DPO Pay, Frank Awelle – whose company was adjudged the Fintech Discovery of the Year, lamented that extreme regulation, if not checked, could hinder the burgeoning fintech space.

“Our challenges really have to do with regulations, and that’s why we need the Ghana Fintech Association to come in and see how they can sanitise the space for us,” he said

He, therefore, urged regulators to soften requirements for fintechs to allow for greater innovations and competition.