Financial Technology (Fintech) refers to the use of technology to improve the delivery and use of various financial services. Primarily, it is utilized to facilitate easy access to all forms of financial products.
Fintech has come to stay in Nigeria and will continue to unlock more technological innovations and possibilities, especially in bridging the existing financial inclusion gap. Asides initial threat to traditional banks, special attention should be drawn to their symbiotic nature. As Fintechs continue to roll out disruptive and revolutionary products to improve customer experience amongst others, traditional banks can equally scale up investment in Fintechs or even toll the path of acquisition to increase market size in addition to Fintech’s big data that can be analyzed for insights.
There is no doubt that the Nigerian financial terrain has progressed rapidly over the years with the current Fintech disruption in the sector. Thanks to the continued growth of digital innovation, increasing internet penetration, access to mobile phones and not forgetting CBN’s National Financial Inclusion Strategy aimed at achieving 80% financial inclusion as well as ensuring that all Nigerian Adult have easy access to a broad range of formal financial services that meet their needs. Already, the majority of the total adult population in Nigeria are already relying on financial technology to carry out their financial needs ranging from payment, asset management, blockchain management, credit, pension, investment, and insurance-related transactions.
With over 100 Fintech firms currently operating in Nigeria, it is important to understand some of the various categories in which they operate.
1. Payment Platforms: This is the most active of all categories as Nigerians often make use of the platform to pay for their utility bills (Water, Electricity, Waste), satellite TV, etc. Fintech firms in this space provide platforms for end-to-end electronic payment solutions. Some of the players include; Baxi Pay, Paga, Cellulant, Flutterwave, eTranzact, Paystack, Remita and OPay. Some of the FinTechs in this category also carry out agency banking services as a tool for driving financial inclusion.
2. Savings/Investment Platforms: These are personal saving solution platforms usually in a mobile application format. They are set up to help people develop the habit of saving with a considerable amount of interest in investment. Examples of firms operating in this category are PiggyVest (formerly Piggybank), Cowriewise, Farmcrowdy, Kolopay, and PorkMoney.
3. Lenders: Fintech firms that fall into this category offer nano and microcredit to MSMEs and individuals who have the capacity to pay back. The most popular of them is Renmoney. Others include; Pay later, Page, CreditDirect, and Zedvance.
4. Digital Bankers: Notable full-time online bankers under this category are Alat by Wema Bank and KudiMoney. They offer similar services as the traditional banks and provide access to all banking services anywhere you are so long there is access to the internet.
5. Blockchain/Cryptocurrency Platforms: The Blockchain Fintechs under this category create platforms where users can trade Nigerian Naira for Bitcoin, Ethereum, XRP (a form of cryptocurrency) using blockchain technology. Firms in this category include; Nairaex, Sureremit, Ellcrys, Nairaswitch, Tanjalo, and Buycoins.
6. Payment Terminal Service Providers (PTSP): Fintech firms in this category are charged with the responsibility of ensuring the effectiveness of Point of Sale (POS) operations, support and maintenance infrastructure. Some of the PTSP firms include Citiserve, Interswitch, Paymaster and Xpresspayment.
Written by: Kehinde Fashua, a Research Associate at Dun & Bradstreet Nigeria. His interests span IT, new media, environment & spatial analysis.