‘Even as the Africa’s fintech economy still growing, it is right to say that it has done well within a short period, as is evident in Nigeria and some other African countries. As Nigeria tends to leverage technology to bridge the gap between its inherent challenges and limited solutions available, we are bound to see greater developments and innovations that will gradually grow this great country into a hub of technological innovations’
IN the last five years, the growth of fintech in Nigeria has been phenomenal. The market is one of the fastest-growing globally and Nigeria has seen steady growth in its fintech ecosystem, gaining recognition in Africa as one of the biggest and most innovative success stories.
Financial technology (abbreviated as fintech or FinTech) is the technology cum innovation that aims to compete with traditional methods in the delivery of financial services. It is an emerging industry that uses technology to improve activities in finance. In layman’s terms, fintech is focused on mobile lending, mobile payments, mobile savings, wealth management, and personal finance.
The market is expected to grow globally by $305.7 billion US dollars by 2023, making it one of the fastest-growing sectors. Some of the popular fintech companies worldwide include Paypal, Transferwise, Robinhood, Alipay, and Stripe – which recently acquired a Nigerian fintech company.
As one of Africa’s largest economies with a population of over 200 million people, Nigeria offers great opportunities for fintech companies to grow and become successful. Popular fintech companies in the country are; Interswitch, Paystack, Piggyvest, Payattitude, SystemSpecs (Remita), Flutterwave, Opay, etc.
According to a joint report by Ernst Young Nigeria and Fintech Association of Nigeria, the country’s fintech revenue is expected to increase to $543.3 million in 2022 as opposed to $153.1 million in 2017. The country’s fintech ecosystem has made it possible for small business enterprises to experience a smooth payment process with the likes of Flutterwave, Remita, and Paystacks. This particular sector of online payment has grown in the last three years by 28 percent.
With Fintech companies on the rise, traditional banks seem to have gotten themselves some sort of competition. A percentage of Nigerian youth would rather deal with fintech financial services than go through the inconvenience of traditional banking. With an added advantage of an attractive interest rate of 10 to 13 percent on savings, the likes of Piggyvest and Cowrywise target young adults compared to traditional banking of four to six percent. These fintech companies offer special features which include; allowing their users to save towards a specific goal and also providing investment opportunities like mutual funds.
Also, fintech companies like Interswitch, Opay, and Paga compete with mobile banking applications that offer supplementary services to send and receive transactions. Lending is also not left out of the fintech growth strategy. Companies like Renmoney offer short-term loans to individuals. The banking fintech sector is not relenting and has also come up with its solutions to lend short-term loans to individuals, for example, Quickbucks by Access Bank and Quick Credit by GTBank.
A lot of factors contribute to the growth of fintech startups in the country, some of which include; ease of use, social influence, and service trust. Though a certain percentage of Nigerians still don’t trust fintech companies, it has still not hindered the growth of the sector.
Even as the Africa’s fintech economy still growing, it is right to say that it has done well within a short period, as is evident in Nigeria and some other African countries. As Nigeria tends to leverage technology to bridge the gap between its inherent challenges and limited solutions available, we are bound to see greater developments and innovations that will gradually grow this great country into a hub of technological innovations.
*Esohe Braimah is an undergraduate student of the Department of Finance, University of Lagos
