How are Nigerian fintechs growing so quickly?
It seems that every week there’s news of fintech startups in Nigeria raising millions of dollars in funding or celebrating 10 million customers and billions of dollars in transactions. This has generated a lot of interest across the business and financial community as to why this has happened so fast. We sat down and spent some time to understand the shifts in the financial landscape and how Nigerian fintechs growing so quickly.
In the past, to send money, one had to leave the house/work, walk to the bank, stand in line at the counter or ATM and finally send the money. However, due to fintech companies, it is now easier than ever to send & receive money both locally and internationally. One doesn’t have to line up at the bank. All you need to do is download an app on your phone, create an account and send/receive money within minutes. A perfect example of this is Interswitch, a payments fintech that focuses on fast and efficient payments, through their app Quickteller. Quickteller enables one to make bill payments, shop globally online, buy event tickets and Flight bookings, all from the comfort of the app.
Fantastic Customer Service
A number of Nigerian fintech companies have grown by improving the quality of Customer Service they offer their clients, in comparison to traditional financial institutions. This has led to increased efficiency and productivity, resulting in flooding of the fintech ecosystem with external funding, especially from venture capital firms. The fintechs customer service teams are known to be available 24/7/365 even during holidays! A great example of this is Piggyvest, known for its saving and investment app. They have a great customer service team, active through multiple digital (even Twitter) & analogue platforms to answer any concerns or queries their clients may have.
Reduced transaction costs
For most customers, it is very expensive to transact through banks. Fintechs in Nigeria have heavily reduced the costs of sending, receiving and spending money. The banking and credit industry has been notoriously unable to change, mostly as a result of regulation, entrenchment and business models. Fintech companies like Opay have been able to heavily reduce transaction costs and even offering free peer-to-peer transactions through the Opay app. In comparison, a bank like GT bank charges N20.00 + N2.50 VAT for GTBank to GTBank Transfers. This large difference has drawn a large number of customers to fintechs looking to take advantage of better and cheaper prices.
Traditional banks and financial institutions are known to be slow and cumbersome. From requiring physical presence at bank branches to using cheques and forms, it is known to take a while for a service to be delivered. For example, It would take a bank anywhere from 1 day to three days for the transaction to reflect and for the money to be received. A large number of fintechs are able to do this at much faster rates from a few hours to minutes. Taking a loan on Fairmoney takes 5 minutes, in comparison, most banks need at least a day to approve and provide financing. This ability to deliver extremely fast speeds has supercharged the growth of fintechs. Most customers have a low ability to plan and have high financial pressure. They need to transact their money more quickly than banks can allow.
Fintechs offer better security for your money. There was a time where walking into a Bank or ATM to withdraw money was a nerve-racking and risky experience. From worrying that someone would follow and rob you, to employee fraud and carrying cash, using traditional financial institutions reduced your financial security. Fintechs have used new and secure technologies to safeguard your money. Using data encryption, digital cash, biometric data, tokenization and more, the fintech industry has been able to offer customers high levels of security and access to their money. Companies like Cellulant are known to have high levels of security, especially as a result of their work with businesses, banks and large corporations.
What do you think? Please let us know if you have anything to add and whether you are rooting for fintechs or banks in Nigeria.
For more information on how Carma is assisting in this Fintech revolution, you can get in touch with Femi Oluyide our co-founder and CBDO - firstname.lastname@example.org