The rise in technology development, coupled with the growing need to create financial solutions that are capable of meeting current financial challenges, has birthed what has come to be referred to as Financial Technology (FinTech). It synthesises both the financial and technology sector.
According to Enhancing Financial Innovation and Access (EFInA), a financial sector development organisation that promotes financial inclusion in Nigeria, the percentage of those financially included (formally and informally) in Nigeria was about 63.3% (vs.60.3% in 2012).
Under the National Financial Inclusion Strategy (NFIS), the Central Bank of Nigeria has set out to increase this number to 80% by 2020. The apex bank has identified five gaps that, if tackled dedicatedly, will bring the country closer to its 80% financial inclusion target by 2020.
The CBN also noted that digital financial service has the potential to add about 46 million Nigerians into the formal financial system by 2025. Interestingly, most of the
lending fintech platforms are promoting financial inclusion.
Two years after commencing operations, Branch, one of the leading fintech lending platforms in Nigeria has recorded a milestone on loan disbursement. The firm announced that it had disbursed its 1 million the loan to bring its total lending to over N9bn in Nigeria, two years after commencing operation.
The online lending firm, which has shown a remarkable growth and increasing user adoption, currently has over 1.2 million users in Nigeria alone and is one of the most funded lending fintech platform in Africa after it raised $170m in series C financing in April led by Foundation Capital and Visa.
Financial technology companies like Renmoney, Page, Branch, Kwikmoney, and Carbon, etc are positively disrupting the lending industry as most of them offer quick, easy and cheap loans with no collateral. These firms offer up to N4m in loans after a few minutes of signing up on their platforms by utilising smartphone data including phone calls, text messages, BVN, etc. in determining the credit score of potential borrowers.
This has led to massive adoption by Nigerians ranging from small business owners, artisans and blue-collar workers who do not have sufficient credit history to take loans from banks to salary earners who need soft loans before payday to individuals who need urgent funds and are unwilling to go through the bureaucratic process traditional bank loans take.
As advancements in technology continues, we believe Fintech will revolutionize the banking and financial services delivery systems and help bring the country closer to its financial inclusion target.