Nigerian Fintech Boom: Banks Launch Fintech Subsidiaries to Collaborate With Existing Fintech Players
Globally, the financial services industry has seen the influx of new fintech players, that are leveraging cutting-edge technology to simplify the financial transactions of users.
These fintechs are disrupting the traditional banking model by using technology to make financial operations easier, faster, and more accessible to individuals, businesses, and institutions.
In Nigeria, the fintech sector is currently experiencing a significant boom, characterized by rapid growth and innovation, as some notable Nigerian banks have launched their Fintech subsidiaries.
As customer behavior is evolving along with global developments, resulting in customers’ increased willingness to use Fintech services, these banks are leveraging mobile technology and digital platforms, to provide solutions to customers.
While Nigerian traditional banks are seeking to adapt their existing infrastructure, some have partnered with several fintech startups to enhance their digital offerings to tap into the technological innovation that fintechs have brought to the table.
With financial firepower, these banks are taking charge of their future via strategic and intelligent investments in financial technology businesses.
According to financial experts and analysts, the entrance of these banks has however threatened the valuation of top Fintech firms, as they are currently speeding up their digital transformation in an effort to maintain customers as well as market share.
A look at some Nigerian banks that have launched Fintech subsidiaries
Wema Bank: In May 2017, Nigeria’s leading innovative bank Wema Bank, launched its fully digital bank ALAT by Wema to drive transformation and redefine experimental banking in Nigeria’s banking sector.
In the first year, ALAT by Wema gained over 250,000 customers who were responsible for over N1.6 billion ($4.48m) in deposits. Today, ALAT boasts over 500,000 customers and has processed thousands of transactions worth over N1 trillion.
Gtbank: In June 2022, Gtbank’s parent company, Guaranty Trust Holding Co Pls (GTCO) launched Squad by Habaripay, a digital payment product that simplifies payments for micro-merchants, SMEs, large corporates, and TechStars.
Since then, Squad has gained market acceptance and become a preferred payment solution for businesses of all scales.
The Fintech has since become profitable in its first month, and in the first six months of operations, Sqaud recorded N926 million, while its revenue for the period stood at N1.52 billion. In January 2023, Squad achieved a significant milestone, crossing N200 billion in monthly transactions.
As Squad by Habaripay continues to provide customers with the tools to do business digitally, the platform is poised to become a force to reckon with in the digital payment landscape in Nigeria and beyond.
Access Bank: In September 2022, Access Holding Plc received its final approval from the Central Bank of Nigeria (CBN), on a new payment subsidiary, Hydrogen Payment Services Company Limited, a company fully owned by Access Corporation.
Hydrogen Pay is dedicated to addressing payment challenges for aspiring businesses. The Fintech deploys cutting-edge technology infrastructure, strong risk management, and governance standards to provide secure, cost-efficient, and convenient payment services to individuals and businesses across Africa.
Hydrogen Pay has an unwavering mission to empower African businesses to thrive, garner admiration, and foster adoration.
Conclusion
With the entry of Nigerian banks in the Fintech space, the ecosystem is becoming swarmed with big and upcoming players seeking to gain a huge part of market valuation and upstage each other in the system.
Fierce competition for customers, patronage, and loyalty has begun to occur, given the need to secure market share, increase profitability, and boost valuation.
Also, the entrance of bank-owned fintech companies has spurred existing Fintech companies to increase their drive for expansion.
On a bigger and positive outlook, as banks continue to launch Fintech subsidiaries, it holds much promise for Nigeria, in ensuring that the underbanked gain access to exclusivity in financial product and service offerings.
Given the role that fintechs play in the economic transformation of any country, it is imperative for the Nigerian government and other key stakeholders to support initiatives that stimulate their growth.
