Writer: OLUWAFIROPO TOBI OGUNDARE, Territory Sales Lead – West Africa And Mauritius
Cloud computing is set to revolutionise Nigeria’s ability to conduct business digitally. Driven by factors such as evolving customer needs and a growing ecosystem of integrators and providers, cloud use is a new benchmark for entire sectors. Nowhere is that more apparent and pressing than in the banking and financial services sector.
Financial service providers (FSPs) in Nigeria can turn to cloud computing to keep up with growing competition, evolving market preferences, ever changing industry regulation and the latest digital capabilities.
By using the cloud and leveraging hybrid cloud experiences, FSPs can realign themselves, unlock new opportunities, and do better for their customers.
Analogue to digital
As of May 2022, 37 million Nigerian adults (or 36.8% of the adult population) were financially excluded. Many of these citizens are low-income earners located in rural and geographically inaccessible areas without sufficient information and communications technology (ICT) infrastructure.
This is a challenge, but it’s only one part of the picture. Nigeria’s population is growing by 2.6% per year. With the population doubling in the next 25 to 30 years, roughly 70% of Nigerians will be younger than 30. Smartphone adoption continues to grow, and by 2025, our country is forecasted to have a 60% smartphone penetration rate.
Our large and connected youth population is driving institutional change with their banking preferences. They are accessing financial services via digital channels, and it’s up to institutions to offer and facilitate those channels if they also want to grow.
Nigeria is also home to hundreds of fintech companies, and the sector has proven to be one of our most lucrative. In 2022, Nigerian start-ups accounted for 46.1% of all fintech funding in Africa, raising more than $650 million throughout the year. Furthermore, fintech start-ups made up the lion’s share (43.4%) of the continent’s raised funding. For many Nigerians, banking has always been a digital experience and never an analogue one. As such, legacy institutions are feeling the pressure to digitise and upgrade their systems and products to compete in a growing, digitised economy.
Changing times
Digitally savvy consumers won’t put up with poor-quality banking services. As switching costs decrease and more companies offer digital products, FSPs have to offer better services to compete. With these changes come new opportunities in the form of banking products and, importantly, information that helps inform those products and FSPs of the market they operate in.
Research by McKinsey shows data and analytics can potentially increase a bank’s cost advantage by 10% and its cost-income ratios by as much as 15%, and improve an organisation’s customer acquisition. Today’s consumers are looking for the best service possible, and it’s up to FSPs in Nigeria to meet that demand by investing in digital infrastructure and solutions.
Finance that flies
Cloud computing solutions enable FSPs to transform themselves internally and externally. From the outside, they can better integrate their business units through data sharing and unified decision making, promote innovation and leverage new technologies like machine learning and IoT platforms, and attract new talent and skill sets.
From the inside, they can build resilience and respond more quickly to market changes, enhance their IT security, and scale computing costs and capabilities where necessary.
For many, the optimal approach is a hybrid one. FSPs opt for multiple cloud providers as this unlocks an ecosystem where applications can be deployed in different clouds, enables them to choose the platform that is most cost efficient for their needs, and allows for a data protection strategy in the event of a cloud failure.
In addition, a hybrid management platform offers greater support for on-premise or edge server and storage infrastructure, advanced data management and protection tools, and improved automation and data compliance functionality. Security and performance are consistent, no matter what happens.
The right cloud strategy begins with making important choices. By working with vendors and technology partners that understand how critical the work is, FSPs in Nigeria can take to the skies and invest in cloud solutions that optimise their business, offer long-term value, and take them where they need to be for their customers and sector.
