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For most of the last decade, the Nigerian fintech story was told in one currency: growth. How many users. How much funding. How fast.
Valuations were often tied to transaction volume and growth, while headlines moved on funding rounds and the founders who moved fastest got the loudest applause.
That story is ending, according to someone who has spent years inside it.
Babatunde Akin-Moses, founder of the digital lender Sycamore, argues that the industry is moving from a technology story to a financial-institution story, from selling financial products through an app to owning, financing and managing more of the infrastructure underneath it.
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In this exclusive interview with Nairametrics, the Sycamore founder spoke about what changed, what he was wrong about when he started, and why the real contest in African fintech has quietly moved from the app layer to the infrastructure underneath it.
Nairametrics: You’ve been involved in Nigerian fintech and digital lending for several years. What has changed most fundamentally about the business in the last two to three years that you think people outside the industry haven’t fully appreciated?
Babatunde Akin-Moses: I think the biggest change is that fintech has moved from being primarily a growth story to being a sustainability and institutionalisation story.
A few years ago, the conversation was largely about customer acquisition, transaction volumes, valuations, funding and how quickly you could grow.
Today, the questions are different. How much does it cost to acquire a customer? How much does that customer actually contribute? How do you manage liquidity? What is your cost of capital? How do you go borderless? How resilient is your business when the naira moves or regulations change?
We are also beginning to see several mature fintechs evolve into banks, financial holding companies, or broader financial services businesses. I think this is partly because, as you grow, you want to serve the customer more comprehensively and have greater control over the financial infrastructure you depend on.
I also think people outside the industry underestimate how much the operating environment has changed. A fintech lending business is not simply a technology company with a loan product. You are managing credit risk, liquidity risk, fraud, regulatory risk, FX risk and increasingly, the expectations of institutional investors.
So, the biggest shift is from growth at all costs to building financial businesses that are resilient enough to survive and continue creating value as the environment changes.
Nairametrics: What is one thing about the Nigerian fintech market that you believed when you started that you no longer believe today? What changed your mind?
Akin-Moses: When we started, I believed that only solving a real problem was enough to make the business a success.
I was convinced that if you built a good product that solved a genuine problem only, the market would eventually reward you. I still believe solving a real problem is necessary, but I no longer believe it is sufficient.
Building a financial business is much more complex than building a good product. You need distribution, access to capital, regulatory capacity, good people, technology, strong governance and a brand people trust. Two companies can solve the same problem equally well, but the one with better distribution, stronger governance and better access to capital will often have an advantage.
When you are small, you are mostly thinking about whether you have enough money to keep the business running. As you grow, you start asking different questions.
Where is the money coming from? How much does it cost? How long is it available for? And does the tenor of your funding match the assets you are financing? That has probably been one of the biggest shifts in how I think about building a financial services business.
Nairametrics: As fintechs expand beyond payments into lending, savings, investments and deposit-taking, why are more of them trying to own more of the financial stack rather than relying on banks and other licensed partners?
Akin-Moses: I have always maintained that you either die a specialised fintech, or live long enough to see yourself become a bank or a group holding company.
There is nothing wrong with being specialised. In fact, some fintechs will build very successful businesses by focusing on one thing and doing it exceptionally well. But as you grow, you naturally start asking whether you should continue depending on other institutions for critical parts of your value chain.
For example, partnering with a commercial bank is necessary for settlement. But is that sustainable in the long run, and at what cost? You are dependent on their pricing, their systems, their risk appetite, their regulatory decisions and sometimes their strategic priorities.
The same applies to other parts of the financial stack. As you serve more customers and offer more products, owning some of the infrastructure yourself gives you greater control over the customer experience, the economics and the way you manage risk.
That is why we are seeing some fintechs evolve into banks or financial holding companies. It is not necessarily about wanting to become a bank for the sake of becoming a bank. It is about asking, “What do we need to own to serve our customers better and build a more sustainable business?”
But I don’t think every fintech needs to own everything. There is still a strong case for partnerships. The key is knowing which parts of the stack are strategic enough to own and which ones are better left to specialised partners.
Nairametrics: What has happened to the economics of very small digital loans, roughly N5,000 to N10,000? Have regulation, recovery challenges, fraud, funding costs or customer behaviour made this segment materially less viable? What does that mean for the customers these products originally aimed to serve?
Akin-Moses: The economics have become much harder, and I think one thing people sometimes miss is that lending is not only about giving out the money. You have to consider what it takes to originate the loan, underwrite the customer, monitor the loan, recover the money and still make a reasonable profit.
Take a simple example. If I lend N1 million to one customer, I have one customer to assess and manage. But if I want to lend that same N1 million as N5,000 loans, I now have 200 customers.
Those 200 customers still need to be onboarded, assessed, monitored and followed up for repayment. You may need relationship officers, recovery agents and technology to manage those relationships. The operational cost is therefore very different.
Then you add fraud, recovery challenges, funding costs, regulatory requirements and changes in customer behaviour. The economics become even more challenging.
This doesn’t mean there is no need for nano-credit. There is a huge need for small, short-term credit, particularly among people who are underserved by traditional financial institutions. The challenge is building a model where you can serve those customers responsibly and still make the economics work.
I think this is also why the industry is moving towards using more data and technology in credit assessment and collection, like credit scores and credit bureaus. If you are lending N5,000, you cannot afford a business model where the cost of managing the loan is close to the value of the loan itself.
So, the question is no longer simply, “Can we lend this customer N5,000?” The question is, “Can we serve this customer sustainably?” If the answer is no, eventually the customer loses because the products either become more expensive, less available, or disappear altogether.
After several years of lending, what have you learned about Nigerian borrowers that surprised you? Which data points or behaviours have turned out to be much more, or much less, predictive of repayment than expected?
One thing I’ve learnt is that people are often more complex than the data initially suggests, and looks can be deceiving. A person can look risky based on one traditional data point and still be an excellent borrower. Conversely, someone who looks good on paper can default. This is why alternative data is important.
We’ve learnt to look at behaviour rather than rely entirely on bank statements. How does someone transact? What does their cash flow look like? How consistent are they? What happens after they receive money? How do they behave when they have an outstanding obligation?
For businesses, cash flow can sometimes tell you much more than a set of historical financial statements, especially for SMEs where the quality of formal records varies significantly.
I think one of the biggest lessons is that credit scoring is not about finding one magical data point. It is about combining multiple signals and continuously improving your understanding of borrower behaviour.
Nairametrics: Looking ahead, what is the biggest change happening in Nigerian or African fintech that you think the media, investors and regulators are currently underestimating?
Akin-Moses: The biggest change is the shift from fintech as a category to financial infrastructure as a category.
The first phase was about building apps. Payments apps, lending apps, savings apps, investment apps.
The next phase is less visible. It is about the infrastructure underneath those experiences: credit data, identity, risk management, payments infrastructure, compliance, liquidity and capital markets. I also think we will see more fintechs become financial institutions rather than simply technology companies providing financial products. And there will probably be more consolidation. We have already seen acquisitions and combinations across the ecosystem.
The companies that survive the next phase will not necessarily be the ones with the most users. They will be the ones that understand the economics of their customers, manage risk properly and build businesses that can survive without continuously needing someone else to fund the next stage of growth.
That, to me, is the real maturation of African fintech.
