Startups in the financial technology segment have stepped up their push for growth in customer acquisition as the competitive landscape in digital banking gets more intense and investors look to other tech segments for new investment opportunities.
The tech space may have seen a lot of funding activities in the first half of 2019, but fintech startups have struggled to sustain the edge they had over other segments in previous years. Usually, by the second half of the year fintech startups would be dominating the funding chart, however out of the $110.9 million already closed in 2019 by over 30 startups; fintechs have only managed to raise a little above $18 million according to data gathered by TechPoint Africa.
They did dominate first quarter investments raising over $17 million out of the about $28 million received in that quarter. However there was a serious lull in the second quarter as startups in musictech, ecommerce, and motorcycle hailing took the shine. In April for instance, Boomplay, a startup owned by Transsion raised $20 million Series A fund while Jumia Group secured $56 million corporate round whereas six fintech startups had to share $1 million funding in the same month. In May and June, it was the turn of motorcycle hailing companies like Gokada and Max to secure a combined $12.3 million. The only fintech funding in that same period went to Trove, a crypto firm, which received $50,072.
The shifting attraction however may be temporary as new investment in July from Chinese venture capitalist firms in OPay suggest. Although, OPay is more of a platform driving three units including ORide, OFoods and OPay, thus, it is expected that the $50 million investment in the company will be spread among the units.
The funding lull also seems to have had a positive effect on fintech players as some of them are increasing their campaign to lure more customers to their platforms and to pay for their services.
Carbon’s 0% interest loans
Carbon, former Paylater and one of the few startups in fintech that got investments and made a high profile acquisition earlier in the year, has been on an aggressive campaign to lure new customers. It recently launched an interest-free loan drive for people who are applying for loans for the first time.
“(I) just received my first loan from @get_carbon. (I) not going to lie, that sweet 0% interest rate for first timers this week helped,” a customer, Chibuzor Obiora posted on his Twitter handle @nbyodai. “A loan without stepping into a bank? Fantastic.”
By 10 July, three days after the campaign was launched, the company said it has disbursed 10,000 free-interest loans to new customers. As a result, the campaign was extended from 12 July to 19 July.
“We are in a competitive space but whoever serves the customer best will reap the rewards,” Ngozi Dozie, co-founder of Carbon had said earlier in 2019 when the company changed its name from Paylater to Carbon.
Interest-free loans are a rarity for businesses in Nigeria, they are however very effective in attracting customers.
Investify on PiggyVest
Investify could be one of the most innovative features by a fintech platform in Nigeria in 2019. The feature was recently added by PiggyVest, one of the fintech platforms that has transformed savings and helped many Nigerians develop a culture of saving for the rainy day.
In its launch statement in February, PiggyVest explained that Investify is an investment feature that allows users to invest in agriculture, production and industries for bigger interest margins right from the app. Through the feature, users of the PiggyVest app have been able to invest in ventures in agriculture, motorcycle hailing services, and fixed yield investments that could fetch between 17 to 18% per annum.
Renmoney mobile kiosks
Last week, Renomoney took credit access to a whole new level by erecting kioks in local communities with agents helping customers secure loans within minutes of applying. The company said in April that the goal was to deepen financial inclusion and improve lending to individuals and investment in small and medium enterprises in a more convenient way. Since it began in April, the mobile loan kiosks have been seen in tens of locations around Lagos.
A significant number of the startups have also embarked on talent acquisition as part of plans to achieve expansion projects.
