As Africa’s largest economy, Nigeria offers significant opportunities for Fintechs and consumers. However, a significant concern associated with technology adoption in the country is security, which creates a perceived risk in conducting transactions through mobile apps or providing personal data. While adoption continues to grow among SMEs, young consumers, and affluent segments, digital divide and user experience affect a broader acceptance in the mass-market segment.
Despite the dissatisfaction among consumers with traditional banking services and the rise in Fintech products to address these pain points, the switch is not an automatic step for many. According to a report released last year, about 67% of banked customers still trust their banks more than fintech. Senior affluent individuals have also highlighted poor user experience on products and limited availability of value-added services such as advisory and estate planning services.
The COVID-19 pandemic has accelerated changes in consumer behaviour, which could provide new opportunities for the ecosystem. Agile, customer-centric organisations and tech-focused companies are positioned to lead the market during a challenging time. Lending is increasing as more Fintechs leverage payment data to determine lending risk more efficiently. Startups such as Carbon and RenMoney have leveraged alternative credit-scoring algorithms successfully to provide instant, unsecured, short-term loans to individuals.
A youthful population, increasing smartphone penetration, and a focused regulatory drive are expected to increase financial inclusion and cashless payments – which could be the perfect recipe for a thriving sector. To understand Nigerians’ perspectives about Fintechs, we asked our consumer panel how they compare to traditional banks, and if they trust these companies to keep their money safe.
The value of M-Pesa transactions in Kenya grew by 32.9% year-on-year to KES9.04 trillion ($82 billion), while the volume of M-Pesa transactions grew by 14.9%, to 5.12 billion transactions. What we have in Nigeria are not problems in innovation, but massive improvements on which investors are placing massive bets.