FinTech: Do We Need More FinTech In Nigeria?

2020 report data from the Enhancing Financial Innovation Access (EFInA), shows that 36% of adults in Nigeria( 38.1 million people) are excluded from financial services. A problem fintech startups generally seek to solve. In Nigeria, fintech startups are dime a dozen. They are about 144 catering to the banked, unbanked and underserved. However, this figure is far lower when compared with other countries.

Many people have asserted that there are now many fintech in Nigeria. The sector is full and as such, there is no need to build in the sector anymore. However, the number of fintech in Nigeria when compared to that of the UK and the US shows that financial inclusion is still a problem both in Nigeria and the continent at large. Since there is only 573 fintech catering to over 1.2 billion Africans. Hence, there are many reasons why fintech despite being called “saturated” still has much more potential. Here are some:

Promotes Financial inclusion: We cannot argue that existing fintech has not been able to promote financial inclusion to some extent. But they have not fully exhausted their potential. Fintech in Nigeria is still solving the problem of inclusion and creating wealth, especially in rural areas. As far as many people in rural areas do not have access to many financial products, there is a need for more fintech to solve this problem. 

Free Market: when you go to popular markets in Onitsha or Aba. You will see above 100 people selling the same thing. This is known as a free market. The fintech sector is a free market where businesses are supposed to compete for customers. So if existing fintech services are of lower-quality services. Other various financial platforms can cash in on that to provide customers with alternate services. 

Create wealth tools: Another reason more fintech is rolling out is not just because they safeguard existing wealth. Rather, they create tools that generate more wealth. For example, finance management apps like kippa help businesses manage their financials. Fincra, Paystack and Flutterwave help vendors make money by facilitating cross-border payments. Other investment platforms like Risevest, Chaka, and Overwood capitals help people increase their wealth over time. Without a doubt, Nigeria is a place where people want to make more money. Thus, tech enthusiasts can Cash in on these to build more wealth-creating tools rather than just payments platforms. The fact that fintech creates tools that generate more prosperity should be enough reason for more.

Indigenous payment companies’ reach: There are millions of unbanked adults in Nigeria. This is surprising considering that fintech unicorns in Nigeria have not been able to extend financial inclusion to them. Unlike their counterparts PhonePe and Paytm, which boast of 350 million and 333 million registered users respectively in India. Most fintech unicorns in Nigeria still struggle to amass users in millions. This is a direct result of traditional banks restraining fintech since they share a symbiotic relationship. For example, the unbanked can’t own a bank account without a BVN. Thus, fintech should promote financial inclusion by becoming the entry point of the unbanked into the financial system.

Bottom line 

Although the fintech market appears to be saturated, many financial issues have remained unresolved. If this cannot be solved by existing fintech. Then there is a gap for new startups to emerge in the fintech sector.