Nigeria’s fintechs using innovation to catch up to traditional banks
In recent years, several fintech companies have emerged to entice and win new customers by providing the innovation lacking in the big banks in services such as payments, wealth management, savings and investment as well as credit and lending.
Using information and communication technology, they’ve been able to run wholly digital operations that simplify the on-boarding process in a way that particularly appeals to younger people.
With the median age of the Nigerian population at 19 and youths making up more than 65% of the population, banks that fail to innovate to meet the needs of younger customers are at risk of losing out in the medium-to-long-term.
It’s the same demographic largely behind the success of payment companies Flutterwave and Paystack, both founded in 2016. Flutterwave is currently valued at more than $3bn, while Paystack was quickly snapped up by US online payments giant Stripe for $200m in 2020 as a cornerstone of its African expansion.
African startups raised $5.3bn in 2022, slightly more than in the preceding year, with $1.3bn coming to Nigeria alone from venture capitalists. Virtually all of that money went to fintech startups encroaching into service areas that previously fell on the turf of traditional banks.
Though the funding attracted last year was lower than the $1.5bn in 2021, due to looming global economic headwinds, it still underscores the level of interest in fintech prospects.
Source: African Business