Fintech startups in Nigeria have been dominating the tech space, growing by leaps and bounds in the predominantly cash-driven Nigerian economy. This is attributed to reasons such as the fast-growing young population, exponential growth of mobile phone lines and the huge financial inclusion potential, with less than 50 million people with bank accounts in a population of 170 million people, according to data from the Bank Verification Number (BVN).
Initially, fintech investments in Nigeria were primarily focused on payment solutions, with segments such as wealth managements and lending in their nascent stage. But, 2018 was the year of fintech in Nigeria posing a threat to the traditional banking sector, as Internet startups in the country that deliver financial services started attracting more attention as well as funding opportunities.
Most traditional banks offer online access to checking and savings accounts. Such access enables customers to review their balances, transfer money and make payments. Some traditional banks also now let you pay your friends or help you set spending alerts. But overall, traditional banks aren’t on the cutting edge of customer friendly technology and they are still dependent on the fees they charge.
Enter Nigerian fintech startups in 2019. Recognizing the younger generations are more comfortable with the Internet and mobile apps and don’t want to pay for certain services, they have been launching banks with a twist: everything can be done on a smartphone and takes mere minutes.
They are betting Millennials, and their older counterparts too, want something new out of their bank and they want to do their banking without ever going into a branch. Without the overhead of physical branches, fintechs have a cost advantage and can pass on their savings to their customers.
Known as challenger banks in some circles, the fintech banking industry is growing, with more startups waiting in the wings for bank charters. As with any burgeoning industry, there are multiple entrants jockeying for the leadership position. Some have been around for awhile, while others are newer to the fintech banking market. All are aiming to make your banking life easier and more customized, at a lower cost in fees.
Wallets Africa this week launched its business platform helping companies to not just settle bank payments through its platform but get a bank account number in the process. Essentially turning a bank account opening process that takes weeks to a 24hrs activity. Wallets currently charge N25 while standard bank charge is N52.5.
Even more challenging, some of the fintech companies such as PiggyVest, Cowrywise, Kuda, and Wallets Africa [Which launched Corporate account number and settlement in 24hrs], now offer bank account numbers, adding to the competition with traditional banks.