2018 was a mixed year for startups in the Nigerian fintech space. For a handful of them, it was spectacular year as far as funding goes. Cellulant, Paga, Paystack, Lydia, Branch, Piggybank all brought in significant investments secured from mostly foreign partners.
It was also the year traditional financial institutions not only increased collaboration with fintechs but even dominated the fintech space with new products. For instance, about five banks launched their version of WhatsApp banking in 2018. Interestingly, Nigerian banks’ increased participation in fintech was one of the predictions we received for 2018.
For 2019, we asked eight people comprising of investors, founders, experts and professionals to give us their predictions.
“We are now at a point that fintech is no longer a new concept to Nigerians. It is becoming more common for people to transact on digital financial platforms, and this will grow even more in 2019. Incumbents in every financial services sector will join the fintech bandwagon and try to offer more digital products, from insurance to pensions, to trading,” says Babatunde Babs Ogundeyi, founder and CEO of Kudi Capital Management Limited.
The fintech company is behind the Kudimoney initiative which provides personal loans online. Kudimoney made the top 50 in global digital banks’ list in 2017.
“Insurtech will witness the most activity in terms of new entrants. Expect to see more activity in the online lending space with the emergence of new players with significant capital threshold from the Central Bank of Nigeria.
“Those taking deposits and those in the payment sector will struggle to innovate independently without the required license due to lack of capital. This will lead to more collaboration with incumbents where the fintechs provide the technology. However, fintechs that are able to operate with greater autonomy will be more successful as they will be truly liberated from bureaucracy of larger corporate.
“With regards to funding, expect to see more foreign inflows particularly at seed stage as more investors take bets on smart and ambitious founders.”
Ahmed Razaq, the co-founder and CEO of CowryWise which recently made the list of top 50 World-Changing Startups to Watch, says 2019 will see more regulatory framework for fintech taking hold and adoption of fintech will increase as firms pursue growth to justify the investment flow into that space.
“Payment will continue to create attention as the growth trajectory is quite steep,” Razaq told BusinessDay, “Also, financial services built on payment infrastructure such as credit, savings and investment will lead the pack.”
Collins Onuegbu executive vice chairman, Signal Alliance and director at Lagos Angels Network (LAN) also expect regulation being a major driver of change in fintech landscape.
“Watch out for the effect of telcos entering as payment service providers into the sector. What I see will be acquisitions; the large new entrants acquiring smaller companies to get a headstart or international operators eyeing the Nigerian market buying up smaller local players and helping them scale,” he said.
Rahmon Ojukotola, founder of StartCredits, a company that offers online loans and help users save money by comparing loan providers, says regulation will boost collaboration among fintech players.
“Assuming the cost of data declines significantly, (it will lead to) a substantial increase in online payment transactions.”
Like Onuegbu, Ojukotola sees potential acquisitions by depositions money banks of fintechs that align with their strategic interests.
Ndubuisi Ekekwe, founder and chairman of Fasmicro and a tech expert also see the fintech space continue on it growth trajectory. However, he does not think mergers and acquisitions are likely in 2019.
“We have about 5 credible companies in the space,” he said, “Most just raised money. I do think there is no need for any to sell. There is still room to fight before they can give up. The industry is still at infancy for us to be talking of M&A.
“The only black swan will be if CBN changes regulations making it harder for them. But if things stand the way they are now, no issue. Zamfara has about 4% BVN penetration – average in the borth is about 7%. This thing is just starting.”
Eromosele Omomhenlem, principal technology strategist, Digital Transformation Maturity & Blockchain at Microsoft, says he sees blockchain going mainstream as blockchain related projects shift from cryptocurrency initiatives to actual value derivation from the platform.
Within the enterprise space, businesses will no longer seek to explore the importance of blockchain. The focus will be pilot projects for suspected areas of value – harnessing the value of the platform. This will also take the form of partnerships with technology innovation hubs across the continent as well as competency development of in-house teams.
“Startups and tech companies will embrace more of hybrid pilots to explore integration of blockchain into enterprise businesses together with mobile capabilities, artificial intelligence, robotic process automation and machine learning.”
Olaoluwa Samuel-Biyi a director at SureGroup, the fintech company that secured $7 million in funding from an initial coin offering (ICO) believes that 2019 is the year of cryptocurrencies.
“I think it will be the year of cryptocurrencies. Mobile money and bank transfers are already quite mature, but they still don’t fully serve the needs of the market. Cryptocurrencies will fill that gap, especially for cross border transactions.”
Sheriff Olujide, CEO of CryptoBrokerage, a cryptocurrency aggregation platform supported by artificial intelligence, says the beginning of 2019 will be tougher for cryptocurrencies compared to 2018.
“However, towards the end of the first quarter of 2019, the bull would return.”