In 2019, Nigeria through her National Financial Inclusion Strategy had targeted reducing financially excluded adults to 20 percent. However, according to a report by the Enhancing Financial Innovation & Access (EFInA), as of year-end 2020, Nigeria missed out on achieving this target as 36 percent of Nigerian adults (38 million adults), remained completely financially excluded.
In this interview, we speak with the CEO and founder of Tom X Credit, a startup focused on using technology to get Nigeria’s unbanked population banked while creating an interesting financial ecosystem that works and caters to all the financial services needs of this target market segment.
Tomilayo Akano is not a naive entrepreneur. He is a graduate of economics from the prestigious University of Ibadan and an associate member, chartered institute of bankers, Nigeria. His first shot in business was at the university, where he founded his first start-up in his penultimate year as a student. This startup did not go far, but the experience became his ‘’business 101’’ as the experience in itself has triggered the success he has seen in leading his current team at Tom X credit. Tom X credit focuses on giving credit to players in the Nigerian informal sector and those who Nigerian commercial banks would not give credit to finance their business.
With an examination of the current financial landscape and Nigeria’s inability to achieve her set target of banking over 70 percent of her population, could your decision to focus on financial inclusion be as a result of capitalizing on this market to make money or for a much bigger reason?
I had my first work experience at one of the leading banks in Africa. it was during my time at the Global transaction banking unit of the bank that I identified and started using certain tools that gave me the idea to establish a credit business called Starlite Credit.
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I started the company because, while working at the bank, I realized how difficult it was for small and medium-sized businesses to get financing for their business as the requirements were too outrageous for small business owners to meet.
Starlite credit helped businesses grow their business and operations. With an examination of the market size and opportunities inherent, we then decided to scale up operations, leveraging both traditional means and technology to assist a lot of other businesses and even salary earners grow in capacity through financing.
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As demands increased in 2019-2020, the Tom X Credit brand came to life. After a year as a value chain product expert, I decided to leave the bank and work full time on taking these small businesses and those outside the circle of the organized and established financial sector to greater heights with Tom X credit.
So to answer your question, as much as there lie a lot of opportunities in making financial inclusion a reality, the only way Nigeria can reclaim her leadership position in Africa is by reducing her poverty rate, and this can be achieved by having the majority of her population financially active and included.
Indicators are pointing towards Nigeria not achieving financial inclusion till 2025 or later. What role is Tom X credit playing towards boosting financial inclusion, and what are the untapped opportunities you think Nigerians are overlooking?
Nigeria’s population is currently estimated to be slightly above 200 million, yet 62 percent of the population live below the line of poverty with a further 36 percent of the population being totally excluded financially. This statistic shows how massive the untapped opportunities inherent in the nation are.
At Tom X credit, our main objective is to make the world a better place, by creating jobs and making financial inclusion a reality. By staying true to this objective of ours, we provide credit facilities to these low-income earners and businesses to help scale up their growth and flatten the poverty curve. We offer loan services, payment services, and saving services. We have become experts in providing financial services as we maintain an NPL of less than 2% for our loan product, and we have disbursed to the tune of 300 million naira within a year.
To us, access to financial services should be everyone’s right and not just a privilege.
We are not trying to build just a payment system. We’ve made it a lifelong mission to design products and solutions that solve every financial problem from the beginning to the end for the unbanked and those struggling to find their feet in the ambiguous financial scene.
We are projecting to ensure everyone has easy access to savings and other financial services in the coming months. In our effort to make financial inclusion a reality.
Our products are not limited to just the tech-savvy individuals, we ensure that those that are not tech-savvy, experience the joy of tech.
At Tom X we offer instant withdrawals on savings, we even provide alerts for the savers, giving them a feel of the presence of technology, while not being tech-savvy.
We are building technology that makes things easy for everybody; we ensure that we are not taking our attention from those who actually need financial inclusion – the market women, the farmers in rural areas, the casual worker, and so on. We like to see these people grow with us, hence why they are key players in our product design and solutions.
With all that has been said, curiosity beckons. Could you help shed more light on the origin story of Tom X credit and how you got the funding to serve and create solutions for the unbanked
When I finally decided to leave the bank and go after this cause, my audacity bewildered colleagues and family. I was a young man in his early 20s with an enviable well-paying job in Nigeria, and I decided to take a walk and lead a startup that aims to build an interesting financial ecosystem that really helps the unbanked get banked. To them, this was a risk, a big risk in fact as it seemed like I was about to go head to head with the big commercial banks. However, I wasn’t, our focus was to do what these big boys weren’t: providing enough credit and financing for the informal sector and the really unbanked.
In all honesty, it was scary to even myself. But surprisingly, someone who felt I was an asset and believed for me to be willing to pursue this dream, the dream must be worthwhile, called me and requested for a presentation, and there and then, Tom X credit got her first angel investment of 50,000 USD.
The brand started with just me and a single officer but today we have grown to a team of 35 spread across several branches in Lagos and Ibadan, bragging of a team of experienced and dedicated professionals.
Going by the numbers, how is Tom X credit currently faring?
The company has done over 2,000% in revenue within a year, with an estimated $150,000 in revenue EOY 2021. Our clients have increased from 100 to over 2500 in one year.
We launched a product we called TOM X save in March 2021; the purpose of the product is to encourage people without bank accounts e.g the market women and unlearned people to save per day, in a way paying themselves salaries at the end of the period (30 days cycle and they earn appropriate interest on their savings).
Within the first month of launching our TOM X save product, we helped the unbanked save up to 5 million naira, and today we are on 12 million naira per month, witnessing a strong and unstoppable month on month growth.
What do you think are the major factors retarding the quest to expand financial services access to the unbanked population
Asides the wave of instabilities in our policies, I believe the challenge that takes the bulk of the blame is funding. Tom X is currently funded internally, and we hope to get positioned for the injection of more capital that would enable us to reach even more of this identified market segment.
What’s on the roadmap for Tom X, in technical and business respects? What can we look forward to?
When you walk into any of our offices, you’ll clearly see our vision ‘’To become the leading financial institution in the world’’. I believe we would be one of the top five fintech in Africa in the next 5 years, leading the inclusiveness of the unbanked in Africa.
With Tom X credit and your quest for financial inclusion and banking the unbanked, what next?
The company is presently looking at the activation of our next band of investments to help us build a more robust system, scale up and advance our technology, and also meet the required minimum capital requirements for more regulated licenses e.g PPSP, MFB, etc, that would help us see no limit to our growth into the Nigerian and African market. This will help us easily improve on our technical standpoints, technical capabilities and make our processes simpler than they already are.