The financial technology (fintech) sub-industry is tipped to become one of the few segments of the Nigerian economy that will enjoy boundless growth over the next few years.
According to Statista, the neobanking segment is expected to show a revenue growth of 43.4% in 2024.
In the digital payments segment, the number of users is expected to amount to 146.07 million by 2027. The total transaction value in the digital payments segment is projected to be US$14.25 billion in 2023.
2023 will be pivotal:Â Although the years ahead appear bright for fintech in Nigeria, analysts say 2023 will prove to be a pivotal year for the sub-industry.
According to the Chief Executive Officer of the Ham Institute of Cyber Security, Hanniel Jafaru, fintech business in Nigeria is set to take a giant leap in 2023 because of the cashless policy the Central Bank of Nigeria is trying to implement.
Due to the cash withdrawal limit that comes with the policy, most persons will begin to look at the possibility of using fintech services to carry out their transactions.Â
Jafaru said beyond creating virtual cards with fintech companies, individuals also have the opportunity to create virtual dollar cards that would allow them to do dollar transactions online. He said many people have already started using virtual dollar cards made available by fintech companies.
He stated that before now, to have a dollar card the customer would need to have a domiciliary account. However, with fintech companies you don’t need a domiciliary account – you can create the dollar card and transfer your money from your regular account into the dollar card and load it using the black market exchange rate, thus knocking off the need for banking.
What experts think:Â Ambrose Sartee, a venture capitalist in Lagos told Nairametrics that cryptocurrency is another reason why fintech would be a choice for financial transactions. “Some fintechs are making it possible for individuals to make payments via cryptocurrencies such as Bitcoin and Ethereum.
Fintechs are integrating cryptocurrency payments in their platform; anyone that creates this kind of payment system into their platform – it means that users that have cryptocurrencies can make payment direct to clients without having to go through the banks.”
Sartee said that coupled with the fact that Nigeria is growing, the country’s broadband penetration is growing, the Internet access rate is growing, the more persons that get connected to the Internet the more opportunities they will see and have the option of making a choice.
Emmanuel Edebe, the chief executive of Piggybank, a Lagos-based fintech, said with the whole coming on board of more artificial intelligence there is that possibility that there will be new fintech entrants because the cash withdrawal limit will make people see the need to strive to enter the sub-industry. After all, that would be an incentive for people who were considering coming in earlier.
He told Nairametrics that the sky is the beginning for fintech, adding that he expects 2023 to be a year of acceleration for fintech in Nigeria.
Edebe said the e-naira will be another incentive as more and more people will see the need to make direct payments as opposed to the use of cash payments.
He said he expects the bureau de change operators will begin to see the need to have their payment machines to avoid the legal limitation. So people will prefer to go to a money changer where they can scan a barcode and make payments easier.
Francis Ajuonoma, an economist, said several factors are driving the rise of fintech. This includes the focus on underserved areas, the changing regulatory environment, APIs, and customer experience. As a result, there is a lot of capital available for fintech companies to grow and expand their businesses. He noted that such a favourable environment is expected to increase the rise and profitability of fintech this year.
It is noteworthy that because of fintech, more people and small businesses have access to accounts, transactions, and credit. The development of digital savings, cross-border transfer solutions, and insurance also offers the promise of more income and jobs.
Home to Africa’s largest population, Nigeria plays host to a strong and growing fintech ecosystem which is largely driven by increasing smartphone penetration and a massive unbanked population.
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As said the dollar card is mostly essential when you do not have a domiciliary account for transactions or where payment may not be possible into a local bank. The virtual cards are through apps and is like you have a foreign bank account, but the rate of conversion is the black market rate mostly used by merchants. One may experience failed transaction if network is bad or fluctuations. If the app is corrupted or not up to date, your transaction may not go through. The app may not be available when needed may be as result of upgrade.
The app may crash or hacked because hackers are always after the financial platforms.