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.
For instance, The US with a population of 330 million has over 8,775 fintech and the UK with a population of 68 million has over 2,500 fintech.
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.
Cross-regional payments: Payments in Nigeria and Africa are still broken. A situation the many fintech in Nigeria and Africa has been unable to fully solve. Each African country has a diverse financial system. So it is still difficult to send money from one country to another. Although the fintech unicorn, Flutterwave and other startups are facilitating cross-border payments. It does not mean that others can’t innovate a platform that is more seamless, fast, and cheap.
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.
Focus on niche fintech: Part of the reason most people believe there’s no need for fintech is that they mostly focus on payments. There are other areas of fintech that requires attention. For example, insurance penetration has been minimal in Nigeria, leaving wide room for innovation. Fintech niche startups operating in Nigeria can cater to SME financing, innovation in northern Nigeria and women.
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.
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.Featured Image Source: iPleaders
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