Industry leaders have provided insight on the financial technology (Fintech) growth and operations in the country.
They made the insight during the virtual couch session at the recently concluded Lagos Startup Week. Hosted via Twitter Spaces by the Nigeria country manager for Stitch, Benjamin Dada and managing director, Branch Nigeria, Dayo Ademola, who joined other leaders in the fintech industry to discuss the theme, ‘What next for Fintechs in Africa’?
Ademola said, access to financial services has been a sign of development in underdeveloped nations while discussing the significance of financial services in the society.
CEO of Klump, Celestine Omim stated that the rise of fintech has been encouraged by the expansion of cellphone usage and the Central Bank of Nigeria’s cashless policy.
Co-founder Vesti, Olusola Amusan, added that, the lack of access to financial solutions faced by many of the Nigerian population provided the opportunity for fintech growth.
Startup Programme Lead at Paystack, Nubi Kay agreed that fintech is the backbone of commerce, affirming that 60 to 70 per cent of funding for tech startups goes to the fintech space, which has formed the bulk of high-value startups and unicorns in Nigeria.
Speaking on the rise of the fintech space, Ademola had earlier posited that its growth can be attributed to huge gaps that needed to be filled like the provision of credit and the ability to deliver small quick loans without the burden associated with the traditional banking system.
This gap, she said, is why Branch International exists in a country like Nigeria, adding that “yet, this opportunity has also seen its share of challenges. Underwriting and scoring are the main problems with lending in the Nigerian system, whether it be small retail loans or larger individual and commercial loans. Basically, how do lenders determine who is worthy and what models can identify customers that don’t default in payment.”
Ademola explained how Branch has solved this problem, saying “at Branch, we have built a really good model that is getting better daily at scoring people.
“As we do not have an accessible nationwide credit score that can inform your lending decision, we have to depend on alternative data points. We have spent a lot of time fine-tuning the model, so we can make small loans available to people because it is nearly impossible to get a loan anywhere else. We are also good at predicting when people will pay us back.”
Since inception, Branch International has issued over N6 million loans to Nigerians while offering investment opportunities at their fingertips. The digital finance app offers services such as small loans of up to N500,000 ($1200) and long and short-term investment opportunities with one of the highest ROIs in Nigeria.