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Lessons for Nigerian fintechs, as Square gets nod for banking license

Square Financial Services Inc., is expected to launch in 2021 and will be supervised by the Federal Deposit Insurance Corp.

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Square gets the nod for a banking license, what can Nigerian fintech learn from Square’s Geographic Focus

The Wall Street Journal reports that the Federal and state banking regulators in the US have approved an application from financial-tech company, Square, to start its own bank in Utah. The stock on Nasdaq went up by about 16% amid the news of the approval.

The bank, Square Financial Services Inc., is expected to launch in 2021 and will be supervised by the Federal Deposit Insurance Corp. and the Utah Department of Financial Institutions.

Square Financial Services will offer small-business loans to merchants that use Square devices to process their payments. Square’s banking effort started over 2½ years ago and was marked by opposition from some bank lobbyists and community groups, who objected to Square’s decision to pursue a charter for a so-called industrial loan company.

Square gets the nod for a banking license, what can Nigerian fintech learn from Square’s Geographic Focus

Why is this relevant to us in Nigeria? Square is a classic Fintech whose operations have expanded across a few complimentary verticals over the past several years. It started as an innovative Point of Sale Terminal provider before moving to provide technology services for merchants. And now as a natural progression, its offering business loans to the small businesses it already serves.

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There are a few Nigerian Fintech startups that are solving similar problems and may take a cue from the progress achieved so far by Square.

[READ MORE: The greatest tech solutions spring from most regular problems)

But to be clear, a few capabilities that Square has developed are driving this progress and we must understand them.

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  • Innovation: Starting in a market with point-of-sale is already fully penetrated, the company innovated and created a new terminal type, priced for small business and they saw gains.
  • Capital: Square is funded by some of the leading VCs out of silicon valley from inception and has used the capital raised to drive innovation and expand its team to pursue new opportunities including the bank.
  • Geographic focus: As successful as it has been, Square has almost exclusively focused on winning in the US market and sometimes that’s a strategy that is required to be successful.

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3 Comments

3 Comments

  1. Kamo Sende

    March 27, 2020 at 9:34 am

    The metrics for Nigerian Fintechs are different. Asides Square having a support base from major VCs, it seeks to serve as a supplement to traditional banking.
    In Nigeria, Fintechs are a liberation from the evil of traditional banking.
    Traditional banks have drawn unthinkable blood from the finances of the average Nigerian and fintechs serve as a way by which the citizens are protesting the abuse.
    Nigerians would rather now have their monies and Piggybank, Carbon, Aella etc – to make them banks would be to make them one and the same with the same banks the average Nigerian is running from.

    • Nosike

      March 27, 2020 at 2:00 pm

      You hit it right in the money @kamosende. Moreover the amount of hurdles to jump to get the licence as bank is not as straight forward as you would think.

      Fintechs in Nigeria are not trying to be banks but rather provide alternative banking solutions that mitigate the issues customers have to deal with their respective banks.

      Should they cross that line, they would essentially be one of them. Unless the fintechs collectively work together as one entity, leverage on their individual strength to provide the banking services that these banks offer in a more efficient and effective manner, then it would be a welcomed development i.e. like a hypothetical NGO bank that leverages on the solutions and efficiencies of the Fintechs to serve the people. My only issue would be how they would protect against Selfish interests.

      Cheers

  2. LA

    March 27, 2020 at 9:02 pm

    I disagree with the above opinions considering the high percentage of unbanked that currently exists, there is still a lot of space for financial service offerings that fintechs can explore, not having to limit themselves within a particular fence and becoming competitive enough to getting such licenses and not always rendering superiorities to the bank.

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Business News

Lagos state moves against fake news and inciting messages merchants

The government has warned fake news and inciting message merchants to stop their evil enterprise or face legal consequences.

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The Lagos State Government has warned against fake news and inciting messages as they react to videos in social media and online space, creating tension and encouraging ethnic conflicts.

This was contained in a statement that was issued by the Lagos State Commissioner for Information and Strategy, Gbenga Omotosho, on Saturday, October 24, 2020.

In the statement, Governor Babajide Sanwo-Olu urged Lagosians to disregard the videos, which are the tools of anarchists, whose plan is to create hatred and divisiveness for which Lagos is not known for.

The statement partly reads, ‘’Inciting videos of this nature are not what our land needs now, following the loss of lives and destruction that fake news, misinformation and unfounded rumours have triggered in our dear state in the last couple of days.

‘’The government appeals to Lagosians to disregard the calls of ethnic and religious jingoists as well as agents of destruction who are on a mission to destroy our state by pitching us against one another for yet to be ascertained reasons. This is a very critical moment for us as a people. It is, therefore important that we stand together and remain circumspect because the brewery of falsehood is unrelenting in its mission.’

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The commissioner said Lagos State is the melting point of various cultures, tribes and religions across Nigeria and noted we have co-existed harmoniously for ages and will continue to live together peacefully.

He pointed out that the sad incident of the past few days affected everyone who lives, trades or works in Lagos, regardless of their tribe, culture, race and religion. He said this is a time for us to empathize with one another and not listen to purveyors of evil messages, especially on social media.

Omotosho said the government will continue to protect lives and property and warned fake news and inciting message merchants to stop their evil enterprise or face the legal consequences of their destructive actions.

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Appointments

TCN MD, Sule Abdulaziz appointed Chairman of West Africa Power Pool

The acting Managing Director of TCN, Sule Abdulaziz, has been appointed the new Chairman of WAPP.

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TCN MD Abdulaziz, four other directors receive appointment letters

The acting Managing Director of Transmission Company of Nigeria (TCN), Sule Abdulaziz, has been appointed the new Chairman of the Executive Board of West African Power Pool (WAPP). Abdulaziz was nominated by the former Managing Director of Power Holding Company of Nigeria (PHCN), Joe Makoju, who is an honorary member of WAPP.

READ: NNPC signs gas development and commercialization deal with SEEPCO

This disclosure was made by TCN’s General Manager, Public Affairs, Mrs Ndidi Mbah, through a public statement in Abuja on Thursday, October 22, 2020.

In her statement, Mbah revealed that the West African Power Pool was created by Decision A/DEC.5/12/99 of the 22nd Summit of the ECOWAS Authority of Heads of State and Government, and adopted during the 29th Summit of the ECOWAS Authority of Heads of State and Government held in Niamey, Niger.

READ: Indian firm, Ramco signs partnership deal with Nigerian airline

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The appointment was made during the 46th meeting of the WAPP Executive Board which was chaired by the Secretary-General of ECOWAS, Ki Sengui, and held through video conference on October 21.

The statement from Mba partly reads, “While making the nomination, Makoju noted that Abdulaziz is an expert in engineering with vast experience in the electricity sector and therefore will perform creditably as the new WAPP Executive Board Chairman.

READ: Continental Reinsurance Plc acquires 100% ownership of its Botswana subsidiary

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“His proposal was endorsed by MDs and Director Generals and other members of the board,” she said.

According to the statement, Abdulaziz in his acceptance speech thanked the board members and the honourary members for his nomination as the Chairman of the board and assured them of his total commitment to the overall objective of the regional electricity body.

READ: A bitter family feud has continued to hamper this company’s growth

He also expressed the need to move the pool to the next level of operational efficiency and solicited the support of member utilities, especially members of the executive board in this regard.

Explore Data on the Nairametrics Research Website 

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He urged members to ensure prompt payment of their contributions to the pool and also continue to collaborate actively with the secretariat to ensure effective and efficient coordination and implementation of all WAPP programmes.

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ENDSARS

President Buhari to address Nigerians on Lekki toll plaza shootings after investigation 

Minister of Sports says President Buhari will address Nigerians on the Lekki Toll Plaza shootings at the completion of investigations.

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President Buhari to address Nigerians on Lekki toll plaza shootings after investigation , Youth Investment Fund:  Ministry of Finance and CBN to launch provision of funds- Minister

President Buhari will address Nigerians on the Lekki toll Plaza shootings, as he awaits the outcome of the investigations into the shootings of unarmed #EndSARS protesters by soldiers.  

This disclosure was made by Mr. Sunday Dare, the Minister of Youth and Sports Development, during an interview with Arise TV on the unrest and uncertainties gripping Nigeria following the protests over police brutality. 

READ: #EndSARS: United Nations condemns the use of excessive force by Nigerian Armed Forces

The Minister emphasized that the President during the National Security Meeting yesterday has ordered an investigation into the Lekki Toll Plaza shooting, and thereafter he would speak on the incident. 

READ: #EndSARS Protests: Osinbajo commiserates with victims of Lekki shootings

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What they are saying 

When asked by Charles Aniagolu of Arise TV why the President hasn’t made an official statement on the unfortunate event at the Toll Plaza, Mr. Dare explained in his response that President Buhari hasn’t made a statement on the tragedy because he wants to have all the facts, which will absolutely be made public.  

READ: Buhari presented with gold bars mined in Zamfara as Nigerian prepares to launch PAGMI scheme.

“It is important to get all the facts right before we go forward. In this case, it’s going to be difficult to hide these facts because we live in a multimedia world and we have pieces of evidence and corroboration and I think it is important to get the facts right.

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READ: #EndSARS: Feminist Coalition raise Cryptos worth $126,000

“I think that’s the part the President has towed and I am sure that when the facts are made available, this President – because he has integrity – will level with the Nigerian people about what happened on Tuesday in Lekki.” 

Mr. Sunday Dare said the present administration’s commitment to protecting the rights of all citizens is unshaken. He reiterated that in line with this core mandate, a presidential pronouncement was made by the Presidency to permanently dissolve the notorious SARS group. 

Explore Data on the Nairametrics Research Website 

He disclosed that the level of responsiveness and concrete steps that the President has taken to stem down civil unrest in the country is commendable, as the #5 of 5 demands are fully accepted by the President. 

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