The Nigerian FinTech industry has made tremendous progress over the past decade. It has taken off in ways that the world could barely have dreamed of. Granted, the global FinTech revolution was always going to touch our shores at some point; but it has done so with such speed that it’s left many a local analyst pleasantly surprised.
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Much of the growth we’ve seen with FinTech in Nigeria has come from the payments, mobile money, and lending segments. There’s recently been growing in the savings, digital banking, and cryptocurrency spaces as well.
According to a report from McKinsey, about 25% of Nigerian FinTechs in its database are consumer lending companies; SME payments and consumer payments startups were the second and third most common, representing 19% and 17% of FinTechs respectively.
However, there’s still much left to achieve, especially in areas that haven’t seen as much expansion as the ones we’ve listed here. The niches discussed below could be the next frontiers for FinTech growth in Nigeria.
Insurance coverage in Nigeria has remained relatively low. While insurance companies have tried to market their products to the public, their efforts haven’t met as much success as they would have hoped for. Low incomes and deeply ingrained attitudes have limited the amount of impact they can make.
But this story could change. The rise of micro-insurance and low-cost insurance plans, partly driven by InsurTech companies, may help make a large part of the country’s adult population more open to taking out an insurance policy.
There aren’t that many InsurTech startups—yet. But this end of the FinTech landscape shows some promise. It should record a lot of growth in the coming years, as more Nigerians warm up to the idea of insuring their health and properties.
We have already seen a sharp rise in the number of platforms for trading cryptocurrencies. This trend could extend into the near future, as enthusiasm for digital currencies increases.
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But there hasn’t been a lot of activity around other applications of blockchain technology. From smart contracts to international payments, financial record keeping and supply chain monitoring, there’s so much that can be done with it.
While regulators in Nigeria have frowned at cryptocurrencies, they could assent to some of the ways through which blockchain could transform finance and commerce.
Nigerians are looking for safe ways to grow their money. InvestTech offers them many options: real estate, agriculture, stock markets, debt financing, etc.
Several platforms have arisen to fill the gaps in this area. But there’s still a lot of demand for digitally-driven investment, as evidenced by the pace at which user numbers for existing InvestTech apps have grown in the past few years.
The Securities and Exchange Commission (SEC) has anticipated a boom in the digital wealth management space with proposed rules governing robo-advisory services, which it introduced earlier in 2021.
As we have already noted, there’s no shortage of startups offering loans to consumers in Nigeria. But there aren’t a lot of Peer-to-Peer loan (P2P) services—platforms that allow people to lend money to other people with the promise of interest payment on loans.
A few apps allow users to make money from lending. Some of them run a P2P model. Given the popularity of lending apps in Nigeria, we can expect that there will be more P2P lending opportunities popping up in the near future.
RegTech utilizes cloud technology, Artificial Intelligence (AI), and SaaS (Software as a Technology) to help businesses remain in compliance with the regulations that govern them.
Technologies in this niche enable user companies to manage financial risk and detect financial fraud. They are related to various aspects of business, including identity management, Know Your Customer (KYC), tax, and legal.
As regulators become keener on tracking the level of compliance to existing rules among businesses, firms will increasingly seek RegTech solutions to help them remain in line.
The ascent of FinTech in Nigeria hasn’t followed a straight northward course. There have been challenges to its progress, and there could be more ahead. But its continued growth is almost certainly inevitable. The sectors we’ve talked about here could be the next points of expansion for FinTech we’ll see in the coming years.
Featured Image Source: World Finance
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