Financial Technology (Fintech), has been characterizedas a new revolution remodeling numerous sectors of the Nigerian economy. Nigeria cannot be classified as early adopters of fintech, however, the concept is gradually gaining traction within the nation’s financial system with its disruptive approach to banking services relative to the conventional approach.
In recent times, a lot of Nigerians depend on financial technology (fintech) companies for fast fixes to their pecuniary desires. A cross-section of the population use these applications to pay their bills, transfer money, and even borrow cash. The disruption fintechs have caused within the financial services sphere is evident, and their effectiveness and potency are just some of the qualities that have popularised them within the country. According to a piece of research information, in 2018, Nigeria fintechs raised over $95million. If you have been following the startup environment in Nigeria, you’re most likely abreast of news concerning fintechs and their activities.
Major niches in Nigeria’s burgeoning fintech ecosystem
Payment solution providers:
Consumers in Nigeria now gravitate towards online payments instead of the standard approach to traditional (physical) payments. Online payments are safe, fast, convenient and it is the most active of the fintech niches in Nigeria. This for sure is a result of the fact that Nigeria is largely a cash-based society and thus, there’s a huge chance for digitalization.
In as much as there are different classes and scopes of operation within the electronic payment space in Nigeria, there still seems to be an overlap as various payment providers now operate across multiple value chains. Many of these providers operate in the reach of underlying infrastructures that process end-to-end electronic payment solutions, systems and services to stakeholders within the financial space. In some cases, their systems are directly integrated into the core banking systems to provide payout and bulk disbursement services, also with payment gateway services that process web/mobile transactions on behalf of merchants. These firms offer consumer-centric services (web/mobile) for data and airtime purchase, fund transfers, bill payments, merchant payments, and the likes.
Some companies operate the overall spectrum with their mobile money licenses. They offer services such as cash deposit and withdrawals, issuance of debit cards, funds transfer, and different financial services on their mobile phones, utilizing telecommunication infrastructure.
We even have the software application providers, which is the payment infrastructure setup assistants. These include system integrators and pure IT firms that build computer software codes and different IT infrastructure for the general financial services ecosystem.
Access to loans from conventional Nigerian institutions is tough for individuals and small entrepreneurs. On rare occasions where accessible, the procedures are physically rigorous, slow and take a lot of time.
The digital lending platforms in Nigeria provide fast loans without collateral, no queuing, no fee charged, while some need a type of collateral and have different exciting features.
This space is active and it’s due to the gap that exists because banks don’t appear to be doing a good job in providing loans to customers and small businesses.
Savings and Investments platforms:
Designed for users to manage their finances, particularly in terms of savings, online savings and investment platforms are some of the positive disruptions financial technology (Fintech) has delivered to financial services seekers. These platforms are making savings easier for people who were unable to access financial services through regular cash deposit banks. With these portals, websites and mobile apps, many people can now save effectively and invest wisely.
This area taps into customers’ need for higher returns on their investments, an automated way to simplify their savings and comes with improved customer experience.
Another area that has boomed in terms of investment is the Agrotech space for startups that play a passage role to small scale farmers, who make up about 80 percent of the farmer population, to upper-middle-class Nigerians who can provide abundant required capital. The capital injection permits the farmers to cultivate larger farmlands, plant a lot of crops and expand at a quicker pace.
They are other areas in Nigeria’s ecosystem where emerging fintech platforms worthy of mention are building operations.
– Remittance platforms: Sending funds back home from abroad has traditionally always been a tedious and expensive task, exemplified by chains of middlemen, manual work, and hidden charges. Fortunately, developments within the industry over the past number of years mean that individuals and even small-to-mid-sized firms can now enjoy quicker, cheaper, and value-added foreign cash transfer services. Remittance product,Korapay falls under this category.
– Cryptocurrency Platforms: The rave and uptake of various digital currencies across the globe in the 2016/2017 period didn’t pass Nigeria by as the country saw a variety of websites and apps allowing Nigerians to easily store, trade and learn about cryptocurrencies.
– Digital Insurance Platforms: Nigeria is presumed to have the lowest insurance penetration rate in the world with only about 1 percent of the population being insured, it’s attention-grabbing that there’s no single digital insurance company in the country. However, traditional insurance companies are taking note and investing heavily in their digital platforms.