Many financial technology (fintech) firms would describe 2017 as a fairly good year, after facing very turbulent business environment the previous year, due to deep recession that gripped the Nigerian economy. A lot of start-ups still managed to stay on their feet. Hence, there will be those fintechs that will look back at 2017 as a defining moment, the year they announced their presence to the world.
There were several high points to cheer ranging from funding, acceptance in global accelerator programs, growths in user-base, new digital banking platforms to featuring in global fintech influencers lists. For example, Flutterwave secured over $10 million; Aella Credit raised undisclosed seed funds; Riby clocked 100,000 users and joined league of global influencers; Paystack hit N1 billion in monthly transactions; Paylater joined Google launchpad program, Kudimoney made global top 50 digital banks; the list is endless.
Thus, we asked leaders including founders and major stakeholders in the Nigerian fintech space what their outlook for 2018 would be, below are their responses:
Salami Abolore, founder of Riby Finance, a startup that provides simple and smart finance management platform for cooperatives, company groups, employees, and individuals, says he sees an expansion of agency banking and peer-to-peer cash-in cash-out models in 2018. Solutions to bank the unbanked and cooperative banking will become a major focus as well. He also sees the lines blurring further between fintech and commerce. There will also be growth in blockchain, Initial Coin Offerings (ICOs), cryptocurrencies and hopefully some regulation around the technology.
“Fintech will grow 10x next year and 50x by 2020.”
Razaq Ahmed, co-founder and CEO of CowryWise, a fintech company that democratises access to premium financial services says:
“2017 sent a strong signal on the growth potential, market acceptance and investment attractiveness of fintech industry in Nigeria. 2018 will mark build-up on that foundation in terms of regulatory oversight, opening up of more verticals and collaboration with traditional financial service providers. The consumers will win morein 2018 as differentiated value propositions and choices are placed on the table.”
Juliet Nwanguma, managing director of PayU, a B2B payment firm says:
“I see more consumers and merchants adopting global payments methods such as tokenisation for single click payments and recurring payments for subscription services. Online payments for SMEs still remain challenging as they look for cheaper pricing which limits their usage. However, I see payment service providers coming up with unique value propositions to bring the SMEs on board. Finally, with the reintroduction of penalties on cash withdrawals and deposits in 2018 by the CBN, I see more than 100% growth on ecommerce transactions and indeed transactions from other electronic channels, as well as a complete elimination of cash-on-delivery by players in the ecommerce sector.”
Babatunde Babs Ogundeyi, founder and CEO of Kudimoney says:
“If 2017 was the realisation that fintech is an important commodity in the financial services sector. 2018 will see the traditional players in the sector consciously and aggressively trying to build more digital platforms. This will encourage more collaboration and more investments in financial technology. The consumer now has a better understanding and more confidence in managing and spending their money using wholly digital tools. This will undoubtedly drive and lead fintech players to look for more value-adding services.”
Aminu Bakori, founder and CEO of Payant, a Kaduna-based payment platform says:
“I believe 2017 was a great year for fintechs worldwide, but 2018 is going to be much greater; more advancements in payments, remittance and instant payments. Mobile payments would be more comfortable, introduction of blockchain into payments cores and artificial intelligence, just to mention a few.”
Akinola Jones, co-founder and partner at Aella Credit, a company that provides instant loans to Africans, says five trends will define 2018.
First is the increase in blockchain based start-ups. “Scaling in Africa requires functioning without formal banking infrastructure. Blockchain will be key to building credit across the continent. Blockchain technology will allow for instant global payments, secure messaging and introduction to third party financial services such as insurance to the unbanked and underbanked. Aella Credit is building solutions for this at the moment.”
Second is growth in machine learning and data analysis. “Start-ups that can find a way to harness and evaluate data points from various private and public sector institutions to help decision making easier. Government institutions, banks and telcos are holding very interesting data sets that are key to solving some of Nigeria’s most difficult problems.”
Third is a strong growth trend across fintech. “After a deep recession in 2017, I project huge growth in the fintech space. We are currently growing our users at a 100 percent month-on-month and I foresee start-ups solving core needs for the Nigeria people.”
Fourth is artificial intelligence. “I envision more start-ups in fintech using artificial intelligence to help Nigerians save and spend better. Banks will be key to helping such start-ups grow, as data will drive such platforms.”
Finally, Jones sees less foreign investment for seed-stage deals and more local investment and better valuation terms post recession. “Venture funds across Silicon Valley placed bets on various Nigerian start-ups in 2017 and will be waiting to see how the investments fare. Silicon Valley will significantly reduce investments in seed deals but will be looking for great Series A and follow on round opportunities. Nonetheless, local funds such as ventures platforms like Elumelu Foundation and Itanna by Honeywell will carry some of the weight for local seed deals at terms they would not have offered two years ago.”
“The fintech space would become more matured as local funds start to make plays. So far, it has been more of hype and hyperboles. Irrespective of the sexiness of fintech stardoms, real problems exist to be solved by the challengers. The market would weed out the ‘wannabes’ and lightweights. The venture capitals that got burnt from their letting fintech run riots would bring sanity and governance. That should attract new investors. Watch out for new seed funder such as Microtraction and Itanna.
“The cost of electronic transactions dropped significantly this year, and that spurred a massive increase in transaction counts. Of course, you can’t disown the impressive improvements in success rats of POS, ATM and interbank transactions. Nevertheless, smaller players are still having a tough time enjoying part of these goodies. There would be more growth in 2018. However, as electronic transactions count get higher, expect another wave of pricing reduction, triggered by the smaller fintechs who are fighting for customers and eyeballs.”
Segun Adeyemi, founder and CEO of Amplify Pay, a payments startup, says:
“Competition within the country will get more intense as banks, telcos and fintech startups launch very innovative and competing products. There is going to be some mergers and acquisitions between both familiar and strange bed fellows. There will be new push from regulators and likely regulation similar to the PSD2 during the year. More banks will launch their digital banking platforms similar to ALAT and compete more with fintechs offering services such as savings and loans. There will be attempts by incumbents to get into the insurance space.”
Austin Okere, founder and executive vice chairman of CWG, the largest security in the ICT sector of the Nigerian Stock Exchange and a provider of information and communication technology solutions services across West, Central and Eastern Africa, says;
“Having understood how to meet the financial services needs of ordinary people, fintechs are fast becoming the driving force of financial inclusion. The banks seem to be more attuned to providing services only for big corporate and high networth individuals. The jury is still out on whether this narrow segment is sufficient to meet their growth requirements. Banks will do well to remember that the Post Office was at some point the center of our lives. Any industry that does not innovate to meet the changing needs of their consumers is surely heading into oblivion.”