Battle for Fintech space gets tougher as commercial banks take on key players

By Ralph Tathagata

Call it financial solutions on steroids, the fact is that financial technology, otherwise known as Fintech, and the players that made it what it is today in Nigeria, are not only helping Nigerians to solve problems in the local market, but has also been giving commercial banks in the county a run for their money.

Traveling down memory lane, it would be recalled that a major disruption happened in Nigeria’s Fintech space in 2017, threatening the financial services ecosystem and its traditional banking system. The disruptive noise became so loud that the big commercial banks felt they were going to be pushed out of the financial business sector by Fintech firms.

What’s more, the threats came to the fore during the recent naira redesign and cashless policy of the Federal Government, as consumers abandoned banks’ payment platforms for fintech apps to facilitate seamless electronic transactions.

Distressed and unable to access cash and make electronic payments void of technical interruptions, millions of Nigerians embraced the mobile money solution for convenience and instant financial services

In fact, at the height of the Central Bank of Nigeria’s (CBN’s) Cashless Economy, the volume of electronic payments in Nigeria shot up by 45.6% in February 2023. Some of the electronic payment brands such as OPay, Monie Point and Palmpay leveraged the cash crunch to expand their operations.

A recent report revealed that Flutterwave, Interswitch, and Opay have over $1 billion valuations, making them the top Fintech companies in Africa.

However, a few months after the major threats by Fintech firms, a good number of Nigeria’s big banks appear to be disrupting the Fintech space with much intimidating financial muscles, visibly giving the key players in the industry a run for their money.

Wema’s ALAT, GTBank’s HabariPay, and Access Bank’s Hydrogen Pay have been giving the major players on Nigeria’s fintech landscape a good run for their investments.

Wema Bank recorded in its recent report that ALAT had a 131% increase in customers onboarded in 2022.

GTCO also reported that its fintech firm, Squad, which began operations in June 2022, crossed N200 billion in monthly transactions. It also reported that Squad recorded a profit before tax of N926 million in the first six months of its operations, while its revenue for the period stood at N1.52 billion.

The new kid on the Fintech block appeared a few months ago when Stanbic IBTC Holdings launched its subsidiary, formerly known as Stanbic IBTC Financial Services Limited as ZEST Payments Limited. Zest is now a payment solutions provider, focusing on tech solutions.

To boost the fintech industry on the continent, the African Development Bank (AfDB) signed a 525,000 dollar agreement to support Africa Fintech Network’s (AFN)’s Hub project, recently in Abuja.

Also, according to a recent report, Fintech revenue in Africa is expected to reach $230 billion by 2025 as tech start-ups continue to dominate the financial service sector offering easy and accessible payment solutions to customers. According to McKinsey & Company, Africa’s fintech industry is growing rapidly in the wake of political and economic challenges.

In conclusion, however, the fundamental question is: Can these Fintech offshoots of Nigeria’s commercial banks compete favourably with Opay, PalmPay, Moniepoint and others in terms of speed and efficiency? The coming months will tell what the battle royal between commercial banks and major Fintech companies would look like.


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