Over the past decade, Nigerian fintechs have revolutionized banking, challenging traditional institutions by offering digital, convenience-driven services. However, while fintechs have made banking easier for existing customers, they still face criticism for not significantly advancing financial inclusion. According to a KPMG report, over one-third of Nigerian adults remain financially excluded, with many digital banks largely serving those already banked rather than reaching the unbanked population.
At the recent DBN Techpreneur 2023 Summit, OPay Nigeria’s co-CEO, Olu Akanmu, emphasized that fintechs must shift their focus to bring underserved populations into the financial fold. “There’s a greater purpose fintechs must fulfill beyond serving existing bank customers,” Akanmu said, underscoring the need for a broader approach to financial inclusion.
Compared with Kenya’s success in this area, where non-banks contribute significantly to financial access, Nigeria lags behind. In Kenya, 83% of adults were financially included in 2019, with banks and fintechs nearly equally responsible. In Nigeria, however, banks accounted for 45% of financial inclusion, while fintechs contributed only 6%.
Industry experts argue that partnerships between fintechs and traditional banks could be the key to accelerating financial inclusion in Nigeria. Akanmu highlighted how combining fintech innovation with bank partnerships could improve market access and scale up financial services at a minimal cost. Kristin Wilson of Spurt added that partnerships are essential for early-stage tech businesses, enabling access to a broader customer base and facilitating growth.
However, partnerships come with challenges, as Nigerian banks often seek fintech collaborations for specific needs, creating a dynamic where startups sometimes feel they are at a disadvantage. Akanmu advised startups to weigh the benefits of expanding their reach through such partnerships, even if they don’t always feel like equal partners.
Regulation also plays a crucial role in fintech growth. With the Central Bank of Nigeria recently revoking numerous fintech licenses for non-compliance, Akanmu urged fintechs to proactively manage regulatory issues and maintain open communication with regulators, who, he noted, consider the broader impact of financial innovations on the market.
By embracing strategic partnerships and actively engaging with regulatory frameworks, Nigerian fintechs can strengthen their market position and contribute to meaningful financial inclusion, ultimately transforming Nigeria’s financial landscape.
