Financial technology is here to stay. From its early days as products designed for the periphery of the old banking system, it is now a huge sprawl of digital services with tentacles reaching into greater swathes of our economies.
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And it’s only just begun.
Soon, more innovative FinTech solutions will spring up, and existing ones will be applied to new sectors in exciting ways. Whether you’re a keen spectator or an active agent of this transformation, there will be plenty for you to digest in the coming years and decades.
Here are the top five emerging trends worth watching out for. They could define the future of finance in Nigeria.
As the payments segment begins to mature, we’re going to see more products devised for specific service providers. Segments like education, energy, and others will benefit from this development.
With this will come a treasure trove of financial data, which may be the basis of tailored consumer financing for specific services. Financing could even transcend specific domains; consumers who are diligent with payment for a particular service will be able to access credit for other products.
The Rise of InsurTech
In the past, we’ve covered Nigeria’s burgeoning InsurTech space. We concluded that it has great prospects, but is still hampered by local attitudes to insurance.
But with the rise of micro-insurance platforms, this segment may witness a boom in the coming years. Companies like Curacel, Autogenius, and Tangerine Life have already made moves that are beginning to bear fruit. Partnerships between traditional insurers and IT service providers are also happening.
Hopefully, a more educated, globally-connected Nigerian Populace—which we believe describes tomorrow’s reality–will be more accepting of insurance, and by extension, InsurTech.
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The Blockchain Promise Fulfilled
There’s no shortage of cryptocurrency startups in Nigeria. But what we’re looking forward to are the many ways blockchain could revolutionize finance.
The biggest promise that blockchain holds for the country is easier integration into the financial systems for Nigeria’s unbanked. Transactions and financial records will be much easier to authenticate, and information gaps that leave room for fraud will be closed.
Supply chains dependent on blockchain will run more efficiently because it solves the tracking problem. Our financial system could also be plugged in with the rest of the world. The possibilities connected to this are hard to overstate.
Increased Dependence On AI and ML
Artificial Intelligence (AI) and Machine Learning (ML) are already in use, but we’re haven’t yet witnessed the fullness of what they can achieve.
These tools can be the basis of regulatory technology, robot advisory, and credit scoring. They can also customize Fintech products for individual users by tracking their behaviour over time. This differs from the traditional banking strategy of taking customers as an aggregate and tailoring services for “the general populace”.
There’s such great potential in open banking; it could be a win for both FinTechs and product consumers. For the former, open banking means that they’re able to build products based on customer bank data; for the latter, it implies that they’re able to control all of their financial data from a centralized location.
Experts call this open banking because it’s a shift away from the older, closed model, in which data was held by individual financial service providers. Open banking puts the customer in greater control of their data and lets financial service providers leverage them to build better products.
FinTech brims with innovation. This industry moves with such speed, it’s sometimes hard to keep tabs on what’s going on around it. But we can be sure of one thing: it’ll get much bigger, and even more essential to the way we live our lives. This is why it’s worth watching.
Featured Image Source: Ventures Africa
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