The Growth of Fintech Market in Nigeria
In the last 5 years, the growth of fintech companies in Nigeria has been phenomenal. The fintech market is one of the fastest-growing markets globally. Nigeria has also joined the trend. The country has seen steady growth in its fintech ecosystem and it has gained recognition as one of Africa’s biggest and most innovative fintech success stories.
According to Investopedia, fintech (financial technology) is used to describe new technology that seeks to improve and automate the delivery and use of financial services. In layman’s terms, fintech is focused on mobile lending, mobile payments, mobile savings, wealth management, and personal finance.
The fintech 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 the likes of Paypal and Stripe – which recently acquired a Nigerian fintech company called Paystack. Also, there are Transferwise, Robinhood, Alipay, etc.
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. Some of the popular fintech companies in the country are; Interswitch, Paystack, Piggyvest, Payattitude, SystemSpecs (Remita), Flutterwave, Opay, etc
According to a joint report by EY Nigeria and Fintech Association of Nigeria, Nigeria’s fintech revenue is expected to increase to 543.3 million US dollars in 2022 as opposed to 153.1 million US dollars 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 Paystack. This particular sector of online payment has grown in the last three years by 28%.
With Fintech companies on the rise, traditional banks seemed to have gotten themselves some sort of competition. A percentage of the 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 on savings, the likes of Piggyvest and Cowrywise target young adults with an interest rate of 10 to 13% compared to traditional banking of 4 to 6%. These fintech companies offer special features which include; allowing their users to save towards a specific goal and also providing micro-investment opportunities like Agrictech.
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 in the fintech growth strategy. Fintech companies like Renmony 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, e.g; 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. Despite the fact that a certain percentage of Nigerians still don’t trust fintech companies, it is still not hindering the growth of the sector.
Although Africa’s fintech economy is still growing, I believe 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.
Written by: Esohe Braimah
Opinions expressed in this article are those of the author.