Fintech Trends: Fast-rising Niches in the Nigeria Fintech Ecosystem
Financial Technology (Fintech), has been characterized as 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 in relative to the conventional approach.
Recently, 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 definitely evident, and their effectiveness and potency are just some of the qualities that have popularised them within the country. In 2018, Nigeria FinTechs raised over $95million according to public accessible information. If you have been following the startup environment in Nigeria, you’re most likely immersed with news concerning FinTechs and their activities on a usual.
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 as 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 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 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-facing platforms (web/mobile) for data and airtime purchase, fund transfers, bill payments, merchant payments, and the likes.
They are companies who operate the overall spectrum through mobile money licenses of cash deposit and withdrawals, issue debit cards, funds transfer, and different financial services on their mobile phones by utilizing on the telecommunication infrastructure.
We even have the software application providers i.e 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 people and small entrepreneurs. On rare occasions where accessible, the procedures are physically rigorous, slow and it takes a lot of time.
The Digital lending platforms in Nigeria provide fast loans without collateral, no queuing, no fee charge, while some need a type of collateral and have different exciting features.
This space is active and it’s due to the large chance 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. These platforms are making savings easier for people who were unable to access financial services through regular deposit cash banks. With these portals, websites and mobile apps, many people can now save effectively, invest wisely.
This area taps into customer’s want 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 Agro-tech space for startups that play a passage role to smallholder farmers—who compound 80% 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 people 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 saw a variety of websites and apps allow Nigerians easily store, trade and learn about cryptocurrencies.
– Digital Insurance Platforms: Nigeria is presumed to have the lowest insurance penetration rate in the world with almost about 1% of the population being insured, it’s attention-grabbing that there’s no single absolutely digital insurance company in the country. However, traditional insurance companies are taking note and investing heavily in their digital platforms.
Steve Onwuka | Community Manager at Korapay.