Renegotiating legitimacy in the Digital Age: Insights from Nigeria

This chapter explores an emerging discourse in regard to new entrants and incumbents who are shaping the Nigerian digital banking space. We focus on understanding the legitimacy challenges of new entrants and incumbents in the context of Nigerian digital space. We begin with an in-depth interview with a successful African entrepreneur to set the scene for how new entrant African digital firms encounter and overcome the challenges of establishing legitimacy. We then proceed with a review of literature on challenges of developing digital infrastructure, and strategies for establishing legitimacy in the digital age. The literature review is then followed by a historical overview of the indigenous roots of Nigerian incumbent banks and the challenges of legitimacy in the pre-independence era. Next, a methodology for the chapter is presented followed by analysis and discussion of emerging themes. The initial in-depth discussion reveals the ways African digital start-ups are establishing legitimacy through personal credibility, partnership, and board composition. In regard to the incumbent digital banks, we find that three approaches to renegotiating legitimacy in a digital age are favoured by Nigerian incumbent banks, namely: (a) digital outsourcing, (b) collaboration (an in-house digital unit with external partnerships), and finally (c) going fully digital. This is then followed by learning from a rather unique but intriguing case—an illustration of good practices from Wema Bank Plc (one of the oldest indigenous-incumbent Nigerian banks, which went fully digital). The chapter concludes with insights for both new entrants and incumbents in a digital age.