Top players transforming the Nigerian FinTech ecosystem
By Zion Rufus
Driven by increasing smartphone penetration, the surge in the demand for affordable payments, quick loans, flexible savings and investments, financial inclusion and cashless payments, FinTech companies have tremendously transformed Nigeria’s financial space.
The fintech industry is rapidly overtaking the traditional financial methods in the delivery of financial services through the use of smartphones for mobile banking, investing, lending, and wealth management as they make financial services more accessible to the general public, banked and unbanked.
According to PWC, fintech investments in Nigeria recorded more than US$200 million between 2011 and 2018. These financial technology platforms cut across wealth management, lending, investment/venture capital. Fintech revenues are forecast to grow from US$153m in 2017 to US$543m by 2022, driven by expanding payment services, the e-commerce market and rising smartphone penetration.
Although the Central Bank of Nigeria spurred the growth of the fintech ecosystem in Nigeria through Interswitch, Etranzact, and Remitta, the evolution of Nigerian startups has positioned Nigeria’s fintech sector for accelerated growth on the global stage.
Some of the key players in the industry include Interswitch, Paystack, Cowrywise, Flutterwave, Kuda, Fairmoney, Piggybank, Paga, Alat, KongaPay. Diverse factors across industry fundamentals and regulatory support have formed the base of expected accelerated growth for the fintech industry in Nigeria. This expectation has received significant attention from investors which has led to significant investments as existing players look to position for future growth.
Interswitch makes the list of top 10 fintech companies in Nigeria. In November 2019, Visa invested $200 million in Interswitch which cemented the company’s unicorn status and valued at $1 billion, cementing its unicorn status in the process. The Africa-centered integrated digital payments and Commerce Company headquartered in Lagos uses a switching infrastructure to connect the different banks in Nigeria and provides technology for ATM cards. It encourages the electronic circulation of money just as the exchange of value among individuals and associations on a convenient and steady basis.
American financial services and Software Company, Stripe acquired Nigeria’s Paystack, a startup out of Lagos for over $200 million in 2020. Same year, Kuda, the first Neobank in Nigeria, raised a $10 million seed fund for its operations; the funding round was led by top European VC firm, Target Global and closely followed by Entrée Capital and former subsidiary of SoftBank, SBI Investment.
Flutterwave recently raised $170m from investors, pushing its value to over $1billion. The Nigerian startup headquartered in San-Francisco was launched in 2016, provides technology, infrastructure, and services to enable global merchants, payment service providers, and helps banks and businesses build secure and seamless payment solutions for their customers by smoothening the exchange of funds.
As at 2020, Paystack had about 60,000 customers, which includes small businesses, large corporations, fintechs, educational institutions and online betting companies. PayStack fintech payment solution is the leading and ever growing fintech company in Nigeria. Its online payment gateway makes it easy for merchants to accept credit and debit card payments from users or customers.
Piggyvest is the first online savings and Investment app in West Africa. This fintech platform enables Nigerian debit cardholders to save little amounts of money frequently with minimal effort. They automate the process of saving tiny amounts daily, weekly, or monthly; and then allowing you to withdraw for free on only set withdrawal dates thereby practically making saving more possible by eliminating the temptation to withdraw.
FairMoney is a mobile banking platform for private and business borrowers. It is an application that uses smartphone data to build an instant credit score and give loans. Backed by European and American investors, with a team of 45 people between Paris, France, and Lagos, Nigeria, and over 350,000 loans disbursed. FairMoney was founded in 2017.
With over 250 licensed Fintech companies the Nigerian fintech sector is experiencing tremendous growth, as several startups and innovators emerge with new financial solutions. Nigerian fintechs are also branching out from payments into lending, micro-investment, wealth management, peer-to-peer transfers and insurance.
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