Finance Creating A Ripple Effect Into The Economy The implementation of financial technologies within the banking and finance sectors helps to reach underbanked populations, strengthening the economy and empowering surrounding communities.
NIGERIA
NEXT LEVEL
44
Over the last decade, Nigeria’s fintech sector has witnessed explosive growth. As one of the most enticing tech sectors for investment in Africa, fintech is offering immeasurable opportunities for early investors and emerging economies like Nigeria. Naturally, the Nigerian government is focusing on fintech as a key catalyst for growth in the industry. As part of a national strategy for fintech development, there has been significant interest from policymakers in implementing new regulations for the fintech industry, which will create a ripple effect throughout the entire economy. But what is fintech exactly? In longer terms, it is a technology that competes with traditional methods of financial service delivery, such as settlement services like mobile and web-based payment applications, deposits and lending. Other services that raise capital, such as crowdfunding and peer-to-peer lending, are made more readily available to consumers, as well as access to savings accounts, credit, pensions and insurance. The sector is also involved with investment management services such as e-trading. In short, fintech is a sector that is challenging the traditional relationship that
consumers have had with money, and it is quickly becoming a way of life for the banked and underbanked population in Nigeria. The exponential growth in fintech has led to an increase in start-ups and more established businesses throughout Africa. Fintech investment has quadrupled in 2018, reaching a total of US$357 million. Professionals emphasise a wealth of fintech opportunities in Nigeria that could potentially restructure the financial services landscape. Nigeria has a huge population, but about 40% of its people do not have access to basic financial services. That is where the opportunity lies for start-ups and fintech companies to come in and establish groundbreaking digital solutions to reach many people. Fintech companies in Nigeria have begun to disrupt the industry by introducing digital technology within various parts of the customer’s journey. These companies are able to utilise technology to have an expansive reach into a larger customer base without the high cost of building infrastructure. In this way, the lower cost-to-serve ratio offers a great advantage for the economy, the businesses and the consumer.
