Financial service delivery is gradually merging with emerging technologies in Nigeria. That merger has given birth to what is today known as FinTech. And Fintech providers have completely become an integral part of the financial services sector. They creates a wide range of products and services, which have made money management easier and faster. Startups in Nigeria are today doing business across borders thanks to FinTech. Today we shall talk about the top 10 best FinTech companies in Nigeria in 2022.
So we shall be explaining what is Fintech, its history in Nigeria ad possible direction it is going. But most importantly we shall look at the top 10 best fintech companies in Nigeria.
Some years ago, FinTech was not a thing or rather, there was a huge gap between financial service delivery and technology. But, today, things are being done differently in the financial sector. Almost every entrepreneur is talking about FinTech.
What is FinTech?
FinTech is a wordplay and combo of two popular words;’ finance’ and ‘technology’. In other words, Fintech is actually the short form of saying Financial Technology. So instead of saying Fintech one can say Financial Technology and the person will be correct.
So what is Financial Technology (Fintech)? According to wikipedia it is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. It is an emerging industry that uses technology to improve activities in finance.
It can also be described as a new technology that seeks to improve and automate the delivery and use of financial services. All the companies in this industry have just one goal. And that goal is how to utilize technology to increase financial services’ efficiency and effectiveness.
Someone describes FinTech as a technical tool that supports financial services and makes the delivery of such services easier. In fact, most of the times you hear of a Fintech company worth millions of dollars but it is just an app.
In this post we want to look at the top 10 best FinTech companies currently operating in Nigeria. But before we do that let’s take a look at the history of Fintech in Nigeria.
History of FinTechs in Nigeria
Banking in Nigeria has improved over the years. Competition amongst the individual banks has made for more improvements as the banks try to offer their customers the best services. You remember the days when if you open an account in say Union Bank Ikeja, you can’t withdraw your money from Union Bank Ikoyi. Yes, it used to be like that. There was equally a time that once bank close by 4pm on Fridays no financial services can take place again till 8am on Monday. So if you have an emergency that needs some cash on Saturday or Sunday you name is Mr. Sorry. But today, you can conduct almost all manner of financial services from the comfort of your phone no what time or day it is. So obviously the traditional banking system has improved tremendously.
However, if we must be sincere with ourselves we will agree that there are still gaps. There is still a lot to be done to offer consumers maximum satisfaction with financial service delivery.
Then Came The FinTech Companies in Nigeria
According to a research by Munich Personal RePEc Archive, “the introduction of e-payment products in Nigeria commenced in 1996 when the CBN granted former Allstates Trust Bank approval to introduce a closed system electronic purse called ESCA. In February 1997, Diamond Bank introduced a similar product called “Paycard”. The card-based e-money products assumed an open platform with the authorization in February 1998, of Smartcard Nigeria Plc, a company floated by a consortium of 19 banks to produce and manage cards called ‘Valucard’ issued by the member banks.
But none of those could quite improve the business of e-banking in Nigeria until a new generation of tech driven entrepreneurs arose.
The Fintech Companies as we have it today was driven majorly by two companies. The first of one is Interswitch founded by Mr Mitchell Elegbe in 2002. And the second is Etranzact founded by Mr Valentine Obi in 2003. These are not the only companies from that era, but are arguably the most prominent.
There were many things that could have hindered the growth of Fintech back then but Michell and Valentine were out for a change. For example, when Interswitch launched in 2002, it was estimated then that just about 200,000 Nigerians had access to the internet. In a similar vein Valentine started pushing his idea for mobile payments at a time when Nigerians were still trying to adjust to mobile phone use. In fact at that point text messages took a day to deliver. Yes, this generation won’t know this truth.
The Growth of Fintech Companies in Nigeria
Today there are over 200 standalone fintech companies in Nigeria. This does not even include the commercial banks offering very quality and effective Fintech services.
Talking about founding Fintech has also grown in that respect. According to data gathered by Intelligence by Techpoint, Nigerian fintech startups raised almost $800 million in 2021. This was 120% higher than what fintechs raised in the last three years combined ($360.7 million). As usual, it took the lion’s share of funding across sectors.
In 2019 alone African Fintech startups attracted total funding worth $491.6 million. Of that amount, Nigeria FinTech companies accounts for $122 million. That is 25% of the total in Africa.
This goes to show not just the growth so far, but the fact that investors are really looking this way.
Top FinTechs in Nigeria
Even if you were locked up in a room without any access to the internet world in the last 5 years, I still suspect that somehow you would have heard of Flutterwave. It is the leading FinTech company not just in Nigeria but Africa. The company was founded in 2006 by Olugbenga Agboola and Iyinoluwa Aboyeji. And it has steadily grown over the years.
This tech startup is rated one of the top FinTech companies in Nigeria that help customers send, receive money and pay bills. It has partnered with over 40 banks across various African nations and has processed 100 million transactions.
In 2019, Flutterwave entered a partnership with Visa to launch Alipay and GetBarter, a consumer payment product.
Flutterwave has offices in Lagos and San Francisco and has over 280,000 businesses carrying out businesses on its platform. This top Nigerian Fintech company currently operates in 30 African countries.
When you talk of the top 10 best FinTech companies in Nigeria Flutterwave is surely number one. The current valuation of $3 billion dollars means it is more valuable than any bank in Nigeria.
OPay isone of Nigeria’s biggest fintech company. And it’s unicorn status with a valuation in excess of $2 billion is a testimony to that. During the global pandemic lockdown, the fintech firm experienced stellar growth as the value of its gross transactions increased by over 450% to over $2 billion in December 2020. Today, the company claims its monthly transaction volumes exceeds $3 billion. And this is driven by its strong network of 300,000 agents and 5 million registered app users across the country.
InterSwitch is one of the biggest names in the FinTech industry in Nigeria. But it is not just a big name but also a pioneer. It provides online payment gateways and solutions. Online buyers benefit significantly from their services.
The company was founded by Mitchell Elegbe and started as an electronic payments processing and transaction switching company in 2002.
Among the financial products InterSwitch offer are online consumer payment platforms, point-of-sale terminals, Verve and its ATM card.
As of May 2019, Interswitch revealed that it was processing over 500 million transactions in a month. The same year, the company acquired a 60% stake in eClat, a health technology company.
Interswitch also owns Retailpay, verve debit card, Smartgov and numerous automated teller machines (ATMs) across the country. InterSwitch is among Nigerians tech unicorns with a last known valuation of over $1 billion.
Paystack takes up its rightful place in our list of the top 10 best FinTech companies in Nigeria in 2022.
Founded in 2015 by Shola Akinlade (the company’s CEO) and Ezra Olubi (the company’s CTO), Paystack runs with the mindset that even though it is hard to build a business, getting paid shouldn’t be hard.
Paystack makes online payment easier and more consistent for businesses and consumers. The Paystack online payment gateway enables users to receive payments using invoices and creating payment pages.
With Paystack, your business can complete payment from clients using Visa cards, Verve cards or Mastercard from any part of the world. This makes it one of the top best Fintech companies in Nigeria.
Paystack as one of the top FinTech companies in Nigeria serves over17,000 businesses. Some of their clients include big brands as Betway, MTN, IrokoTV, Domino and Taxify. Of course it has thousands of SMEs too. It has been enlisted in the world top 250 FinTech companies along with 2 other FinTech companies in Nigeria.
In October 15, 2020 Paystack was acquired by Stripe at a valuation of $200m.
Paga is another company making waves in the FinTech industry. It has made it easy for users to send and receive money in Nigeria and is one of Nigeria’s top 10 FinTech companies in 2022.
It was founded by Tayo Oviosu in 2009 and is one of Nigeria’s top 10 FinTech companies. Paga has been featured alongside Paystack in the list of the world top 250 FinTech companies.
Paga is a mobile payment company that is tested, reliable and quick. Even without an internet connection, users can make payment by simply dialling the code, *242#.
The initial goal of Paga was to enable users to transfer money without charges regardless of the amount. However, with time, the company brought in other features that will allow bank deposits, bill payments, and pay in some stores.
In March 2020, Visa announced that it had entered a partnership with Paga on payments and technology. This collaboration enables Paga users to make transactions on Visa’s global network.
Paga, since 2020 started making moves to expand to other countries asides from Nigeria. It acquired the Ethiopian software development company, Apposit in January 2020 and opened an office in Mexico.
This top Nigerian FinTech company boasts over 12 million users, with more than 20,000 agents in different parts of the country.
PiggyVest is one of the best platforms for savings. With PiggyVest, you get to save money at an interest rate higher than that offered by traditional banks. It is one of the top best FinTech companies in Nigeria.
PiggyVest offers different saving plans. You can decide to go for the PiggyBank feature on the platform, which enables you to set automatically the amount of money you want to save daily.
The amount will automatically be deducted from your account every day and saved in PiggyVest until the set time for withdrawal, where you withdraw with the stipulated interest (current 8% p.a).
The Safelock feature lets you fix your funds and lock them up for a specified period. You can only withdraw the money when it has matured. It is similar to the normal fixed deposit feature in traditional banks. The only difference is that you are the one to fix the tenor by yourself. Another advantage is that it pays you up to 13% interest and pays it upfront.
PiggyVest was founded by Joshua Chibueze, Somto Ifezue and Odunayo Ewoniyi in 2016.
E-tranzact together with Interswitch are about the oldest FinTech companies in Nigeria. It is also one of the top best FinTech companies in Nigeria. It also offers a solution to payment issues in Nigeria, enabling businesses to accept payments online.
The company also owns financial service providers like Mobile Topup, PocketMoni, CorporatePay, BankIT and ATM CardlexCash.
E-transact was founded in 2003 and has since processed payment requests from different channels such as ATM, POS, Web, and transactions that utilize mobile automation. It supports networks like VISA, AMEX and MasterCard.
Today E-tranzact is rated one of the top 10 FinTech companies in Nigeria. In 2019, it received the Best Corporate Turnaround and Transformation award at the Business Day Top 25 CEOs and Next Bulls Awards.
Asides from Nigeria, E-tranzact operates in other African countries such as Kenya, Ghana, Zimbabwe and Cote d’Ivoire. It also operates in the United Kingdom.
8. Carbon (Paylater)
Paylater, now Carbon, is a loan app for Nigerians. This company gives out loans to Nigerians through its mobile app, thus eliminating the hassles of getting loans from traditional banks.
This lending platform is a product of One Finance Limited and started operations in 2016. User’s don’t need to present papers to get a loan on the platform, and their services are easily accessible.
Another good thing is that the Carbon app is quick, simple to use, well designed and works efficiently. Here you can borrow money instantly irrespective of your location in the country.
You can also get a loan on the app without a guarantor or collateral. These two (a guarantor and collateral) are things Nigerian banks request when considering granting an individual a loan.
Carbon also has a feature called Payvest that enables users to save. In 2019, Carbon obtained a $5 million loan from Lendable.
As of 2019, this top Nigerian Fintech company had already generated a revenue of up to $10.4 million and have disbursed not less than $35 million in loans.
Carbon received an award as the Best FinTech Solution in Africa at the AppsAfrica Awards and has continued to stay on board as one of the top Fintech companies in Nigeria.
9. Kuda Bank
Kuda Bank is also famous in the FinTech industry. It is one of the top 10 best FinTech companies in Nigeria in 2022. With Kuda Bank, you don’t have to deal with the charges from the traditional banks.
Kuda Bank eliminates the typical paper process as it carries out every stage of the transaction online. This digital-only bank enables users to open accounts online within minutes.
This top Nigerian FinTech company also offers customized Mastercard ATM cards with no transfer fees or ATM maintenance fees. Deposits are also free.
Remita has been voted a couple of times as Nigeria’s Software of the Year. It has indeed set the pace for many Nigerian FinTech companies.
Remita is a product of SystemSpecs by John Obaro since 1991. They help organisations (schools, NGOs, government agencies, multinational companies, SMEs and individuals) make and receive payments electronically.
Remita with a license from the Federal Government of Nigeria serves as the Federal Government Treasury Single Account (TSA) backbone. If you have ever made payment to any government agency then you should be very familiar with Remita.
Remita serves over 1,000 merchants, SMEs, and organisations. It is equally used by over 500 microfinance banks. And it processes over $30 billion in transactions yearly.
Future of FinTechs in Nigeria
We all know how fintech has been a pathway and guide to Nigeria’s market. Fintech has shown a tremendous increase in Nigeria’s capital market within the past few years.
Fintech has also made other organizations and industries realize the use of financial technology to boost sales and productivity. Busineses now also use it to collect customers’ data to provide the products and services they will use with ease.
The dominant factor in fintech is growth, incorporation of tech into finance, and the innovation of new ideas, products, and services.
This has helped financial organisations continually develop new tech products and services. An example is the mobile payment method which makes it easy for customers to buy a product or use a service from their mobile phones.
Many organizations have experienced financial inclusion, especially the banking systems, thanks to fintech and the smartphone community.
Will Fintech become a threat to banks in Nigeria?
A lot of people are of this opinion. They believe that fintech is becoming a threat to banking institutions. Well, that depends on how you see it. For me, Fintech is an enabling technology. It will enable even the banks to become better and serve their customers better.
But yes, it can also become a big threat to any of the banks that refuse to sit up. No bank can operate successfully without embracing technology either in whole or part. I see a lot of banks in Nigeria embracing fintech aggressively and the customers can only be the winner.
Innovation from fintech has helped different institutions and the ecosystem at large. Some examples of these innovations are; mobile payment of bills, online transactions, investment and insurance programs, neo banking, to mention a few.
The fintech industry will continually improve in years to come since it has the regulatory measures to increase financial inclusion in a different sector.
Based on a report from Frost and Sullivan, it was estimated that Nigeria’s fintech revenue would reach $543.3 million in 2022. This will represent a massive increase compared with the 2017 revenue of $153.1 million.
The potential of fintech in Nigeria’s economy is vast. It was revealed in the financial inclusion report of 2016 that the use of mobile finance could boost the annual gross domestic product (GDP) of the Nigerian economy by $3.7 trillion.
Is Fintech in Nigeria Regulated Like Banks?
Yes. FinTech in Nigeria is under some sort of regulation. But it is this regulation or roles of regulatory bodies that gives confidence to investors and customers alike. So having the knowledge that there is regulation assures one that the organisation will always play according to the rules. And it guarantees safety of investment. This equally makes it easy for it to thrive and grow continuously. Moreover, this makes the ecosystem anticipate innovation in years to come.
So the main regulators of FinTech companies in Nigeria are Central Bank of Nigeria (CBN), Security and Exchange Commission (SEC), Nigeria Deposit Insurance Corporation (NDIC), The Nigerian Communication Commission (NCC) and National Information Technology Development Agency (NITDA). Depending on the scope of services each FinTech plans to render it will have to register or obtain the necessary licence from any of the agencies above.
For example, if a FinTech plans to raise money from the capital market then such a FinTech will have to register with SEC. Similarly, if a FinTech plans to accept deposits and save money on behalf of its customers then it has to apply for licence from NDIC.
And one more. Every business in Nigeria have to register with CAC to operate. So if you have any plan of registering a FinTech company in Nigeria you may need to visit any of these offices.
Conclusion on the Top Best FinTech Companies in Nigeria
The FinTech industry in Nigeria is a promising one and is still booming. This list of the top 10 best FinTech companies only covers a small fraction of the FinTech companies and startups currently operating in the country. In fact, there are over 200 FinTech companies in Nigeria today.
These companies have been able to harness the technological opportunities in the financial service industry. However, there are still many available opportunities and new areas to dive into within the industry.
According to a World Bank report, only about 40% of adults in Nigeria have bank accounts. The question is, what happened to the remaining 60%? Why are they unbanked? Is it because financial services are not accessible? Perhaps that is an issue FinTech companies can unravel and solve.
Maybe it is your chance. Don’t miss it.
And if you have any question, I am willing to talk with you.