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Nigerian banks are under pressure of losing customers to fintechs as more customers prefer using fintech platforms which they claim are simple to operate and also deliver in real time.
Fintechs are disrupting the banking industry with innovative approach to delivering banking services and improving customer experience.
The finance sector has seen a dramatic shift in the past few years globally with the emergence of fintech companies. Fintech is transforming the banking and finance sector with its innovative services and technologies.
Daily Independent learnt that fintechs now cover various services such as wealth management, payments, investment banking, and more.
The fintech revolution In banking and financial services poses a threat to traditional banks that must adapt to stay ahead of the curve. It offers quick and convenient ways to manage finances with the use of digital solutions like software and apps.
There is a wide range of fintech software today that allows users to access and manage their finances on the go.
OPay, a Nigerian fintech company launched in 2018, is a big player in mobile payments and financial services. Their app lets people pay bills, transfer money, and more, with over 5 million users and $2 billion in transactions. OPay is one of the best Nigerian fintech companies, and investors believe in them too.
Kuda, PalmPay, Piggyvest, Flutterwave, and MTN’s Mobile Money are the five Nigerian fintech companies among the seven African fintechs that made the world’s top 250 fintech companies in 2024.
According to a recent report by CNBC, an American news and business channel, and Statista, a market research company, over 2,000 eligible companies were evaluated from March to May 2024 but only 250 were rated based on different key performance indicators (KPIs).
“For the second time, CNBC and Statista are awarding the world’s top fintech companies in eight market segments. In total, 250 companies were awarded. The top list is based on the analysis and weighting of overarching and segment-specific KPIs derived from publicly available data points for more than 2,000 companies and open online application forms filled out by more than 100 companies,” the report said.
In parallel, the threats posed by fintechs have the ability to disrupt four categories of incumbents’ business – market share, margins, information security/privacy and customer churn – at higher rates when compared to other financial sectors.
In 2023, there were 217 fintech startups in Nigeria. Compared to the previous years, the number of startups in this sector experienced an increase. Nigeria has, in fact, some of the highest amounts of fintech startups in Africa.
As of October 15, 2023, OPay had emerged as Nigeria’s most popular and downloaded fintech app, surpassing global tech giants like WhatsApp, TikTok, Snapchat, and Telegram, as reported by the analytics platform Data.ai.
Johnson Ademola, a business man, said traders prefer using these Fintechs because of speed and real time transactions
Go to outlets like petrol stations, shopping malls, markets and small business outlets, the PoS machine they use are that of Opay, Palm Pay, MoniePoints and others.
Even operators of agent banking are also not left out. They prefer these fintechs to traditional banks.
Investigation by Daily Independent revealed that banks have given their staff the tall order to go into market and win back customers from these fintechs.
A branch manager of a Tier1 bank in Gbagada, Lagos, told Daily Independent that her branch have been given a target of 350 new accounts monthly.
“We are under pressure. The fintechs are gaining ground and the management has told all of us, including those in operations to go out and look for more customers.
“The report they are giving us is scary. Most of our targets in markets tell us they prefer fintechs to traditional banks.”
Despite telling them that their services are not safe because they don’t have branches, people are still not bothered.
“I now come to work on Saturdays to look for more customers. Even on Sundays, I am canvassing for customers. Most of my staff may lose their jobs if they failed to meet their targets. Things are tough with us, presently”, she said.
Despite the rapid growth, fintech companies in Nigeria face several challenges.
Regulatory hurdles are one of the main obstacles. The Central Bank of Nigeria is still developing regulations for the sector. This can create uncertainty for fintech startups.
Cybersecurity is another major concern. As more financial transactions move online, the risk of cyber attacks increases. Fintech companies must invest in robust security measures to protect their customers’ data.
Looking ahead, the future of fintech in Nigeria is promising. Experts predict that the sector will continue to grow. More innovative products and services are expected to emerge. (Daily Independent)
