The finance industry has always been one of the major industries worldwide. The same thing applies to Nigeria and Africa at large. Yet, despite being a major business sector, it still faces difficulties that affect the average Nigerian customer and the finance sphere.
For instance, bank customers complain of bank issues like lack of access to proper products and services, poor customer support, inability to get money quickly, and outrageous bank charges.
Local banks have created these loopholes in which fintech took advantage of across the world and Nigeria. This has helped the industry gain solid ground in the finance sector.
With fintech, you don't have to worry about bank issues and business problems. Fintech organisations have created smooth and easy financial services and solutions for customers with technology.
You also get access to mobile payments, flexible savings, investments, quick loans, and affordable payment setups.
Fintech is mostly mistaken with banking institutions. But they are both different entities. However, unlike these bodies, fintech organisations are known for their flexible operations and ability to move with technological changes in the sector.
The evolution of financial technology in Nigeria has been mind-blowing. Nigeria now has over 200 successful fintech bodies, both startups, and older ones. These companies have produced lots of tech products and services.
These fintech bodies have offered solutions to banks, business institutions, mobile network operators, and other bodies to provide excellent customer service and experience.
The History of FinTech
It's been aeons since the global fintech industry has been around. However, the origin of fintech dates back to the beginning of the 19th century. During this period, the Pentelegraph device was introduced to the finance system, which banks used for verifying signatures.
The introduction of the ATM by Barclay in June 1967 was a significant breakthrough in the financial sphere.
Another significant improvement that happened in fintech's history is the setup of NASDAQ as the first digital stock exchange market in 1971. NASDAQ is a subsidiary of the National Association of Securities Dealers (NASD), also known as the Financial Industry Regulatory Authority (FINRA).
The NASDAQ setup was shortly followed by the growth of digital trades and online finance systems.
The release of bitcoin in 2009 has been a significant and relevant occurrence that the world is yet to get enough of. This has paved the way for new cryptocurrency startups, which are now used in neo banks.
The invasion of smartphones and computers is also a big plus to the industry. Smartphones have become an important factor in fintech, and it is responsible for their publicity and popularity. As technology began to advance, the fintech industry also increased.
Origin of Fintech in Nigeria
Nigeria makes the list of the top three fintech hubs in Africa. But, of course, it didn't happen overnight. This shows how fintech has evolved in Nigeria.
The history of fintech in Nigeria dates back to when the first Nigerian bank started incorporating technology into their banking system for smooth operations.
The early fintech companies in Nigeria are Interswitch, founded by Mr Mitchell Elegbe; Etranzact, founded by Mr Valentine Obi; and SystemSpecs, founded by Mr John Obaro.
These companies serve as an opening for startups to rise. Some fintech startups that came after the three prominent companies are; Remitta, Opay, Carbon, Kuda, Paga, Flutterwave, Piggyvest, and more.
Thanks to the digital invasion, fintech continues to grow bigger and better in Nigeria and Africa. For example, technology now makes mobile payments prominent in Nigeria, saving bank customers from local bank issues.
The adoption of cryptocurrencies and blockchains into Nigeria's financial system is one of the best financial decisions made. Moreover, this has brought success into Nigeria's fintech sector.
Transformation of Fintech in Nigeria
Fintech has become a household name in Africa's financial world. It has created an environment for startups to scale up, giving room for new ideas, creativity, and productivity.
Fintech continues to evolve positively, thanks to the entrepreneurs that worked tirelessly to make fintech what it is today.
The African fintech ecosystem involves fintech startups, investors, business organizations, financial institutions, regulators, government, and consumers. This financial ecosystem all works together hand-in-hand to make fintech a successful industry.
The purpose of the fintech ecosystem is to improve the financial sphere in Nigeria to benefit everyone in the ecosystem.
The major drive behind the improvement of fintech in Nigeria is the Nigerian government. If they didn't welcome the idea, nothing would be done. Therefore, the Nigerian and African government has been actively involved in developing policies that promote an organized digital economy strategy and policy.
An example of this policy is the digital policy and strategies, whose aim is to provide a plan that makes it possible to use technology to enhance development in Nigeria's sectors. This strategy will help in the growth of the country's economy.
The transformation of fintech in Nigeria has brought about financial inclusion. This means that individuals, startups, businesses, companies, and corporations can use fintech to promote sales and make things (payment of bills, mobile money transactions, saving, insurance, and investment) easier for their customers.
Fintech's transformation has provided innovative solutions by providing fast and smooth financial services and support in the city and the urban areas.
The transformation of the fintech industry in Nigeria has birth lots of job opportunities over the years. These jobs include data analyst, app and web developer, data programming, cybersecurity specialist, and more.
Due to the global and rapid digital change, fintech companies now require new and advanced fintech skills. This creates a job opportunity for people with adequate skills and experience.
If you're interested in fintech, you should leverage the transformation in Nigerian fintech companies.
Is FinTech Regulated?
The fintech industry is governed by various regulations by different regulatory bodies depending on specific activities.
Financial technology is being regulated by the capital regulatory body, the Central Bank of Nigeria (CBN). CBN is the major regulatory body of the financial services industry in Nigeria.
Other fintech regulatory body includes:
- Securities and Exchange Commission (SEC)
- Corporate Affairs Commission (CAC)
- The National Information Technology Development Agency (NITDA)
- National Communication Commission (NCC)
- National Office for Trade Acquisition and Promotion (NOTAP)
- National Insurance Commission (NAICOM) and more!
The following are some of the regulations guiding the fintech industry:
- Regulations on mobile money services in Nigeria
- Regulations on international money transfer in Nigeria
- Regulations on operations of electronic payment channels
- Regulations for licensing and regulation of payment service banks
- Regulations on the use of unstructured supplementary service data
The Future of Fintech in Nigeria
We all know how fintech has been a pathway and guide to Nigeria's market. Fintech has shown a tremendous increase in Nigeria's capital market within the past few years.
Fintech has also made other organizations and industries realize the use of financial technology to boost sales, productivity, and collect customers' data to provide the products and services they will use with ease.
The dominant factor in fintech is growth, incorporation of tech into finance, and the innovation of new ideas, products, and services.
This has helped financial organisations continually develop new tech products and services. An example is the mobile payment method which makes it easy for customers to buy a product or use a service from their comfort zone.
Many organizations have experienced financial inclusion, especially the banking systems, thanks to fintech and the smartphone community.
From many people's perspectives, fintech seems like a threat to banking institutions. However, fintech is not a threat to any organization, but it's a technology that is here to help and support the needs of the customers of these organisations.
Innovation from fintech has helped different institutions and the ecosystem at large. Some examples of these innovations are; mobile payment of bills, online transactions, investment and insurance programs, neo banking, to mention a few.
The fintech industry will continually improve in years to come since it has the regulatory measures to increase financial inclusion in a different sector.
Based on a report from Frost and Sullivan, it was estimated that Nigeria's fintech revenue would reach $543.3 million in 2022, which is a massive increase compared with the 2017 revenue of $153.1 million.
Since fintech is supported by a large ecosystem and regulatory bodies such as CBN, it is easy to thrive and grow continuously. Moreover, this makes the ecosystem anticipate innovation in years to come.
The potential of fintech in Nigeria's economy is vast. It was revealed in the financial inclusion report of 2016 that the use of mobile finance could boost the annual gross domestic product (GDP) of the Nigerian economy by $3.7 trillion.
Here we are in 2022, and the growth of fintech is massive and growing continuously!
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