‘All signs point to fintech, e-commerce as standout sectors during and post-pandemic’

Jadesola Opawumi is the Co-founder/ceo of Spredda, an online Marketplace and Payqart, a financial technology company focused on providing consumer financing at merchants’ checkout both online and in-store. In this interview with Businessday’s Endurance Okafor.

Tell us about yourself

I think I am slowly becoming a serial entrepreneur. Over the years my passion has largely revolved around Fintech and E-commerce. I am currently the co-founder/ceo of Payqart, a financial technology company focused on providing consumer financing to shoppers at merchants’ checkout. I am also the Co-founder/ceo of Spredda, an online marketplace that specializes in offering a variety of instalment payment options to shoppers.

Having worked in consumer finance for over a decade, I have gained extensive experience in various aspects of lending covering areas such as product development, loan origination, underwriting, loan structuring and collections e.t.c. My expertise has always been in developing innovative financial products around everyday needs of consumers and work out a way to leverage technology to deliver it, make it more streamlined, more efficient and more profitable.

I love doing startups. The work is very challenging, diverse and rewarding. It is exciting to be able to build something new from the ground up and find other people who want to join you on your journey to deliver value to customers and solve global problems.

How do you think the coronavirus pandemic affected Nigeria’s fintech and e-commerce industries?

The ongoing pandemic has no doubt tested the resilience of financial institutions. Both traditional banks and digital lenders have taken a major hit as defaults on loans have increased significantly. Rising unemployment and uncertainty has led to consumers being unable to pay back their existing loans. Fintechs in lending have drastically reduced fresh disbursements and hardened their risk controls as well as loan approval requirements.

What has become abundantly clear during this unprecedented time is that many digital lenders were not prepared to respond quickly to the demand for loans, the desire for payment deferral or the potential for future loan demand.

Read also: As banks adjust interest rates at 1.25%, fintechs see mixed signal

On a positive note, Fintechs in payment and e-commerce financing have enjoyed significant growth and maybe doing better than preCOVID. Nigerians who used to be sceptical about online shopping and payments are increasingly adjusting to their new normal. Categories such as generators, Smart TVS, Washing Machine and laptops picked up serious steam as Nigerians adjusted to stay- at- home conditions. As consumer shopping behaviours are evolving, Brick and Mortar retailers are investing in e-commerce to access new markets and improve customer experience.

Fintechs such as Paystack and Flutterwave recently launched retail solutions to help retailers easily set up e-commerce stores and collect payments online. The solutions are simple enough that retailers who are not necessarily tech-savvy can create their online store straight from the app and the best part is that it’s free to use unlike if a retailer were to join a marketplace. With skyrocketing prices and low purchasing power due to the economic downturn, consumers and retailers have also accelerated the demand for instalment payment options known as buy now, pay later or BNPL. While BNPL service used to be more popular with in-store retail, providers like Payqart and Credpal are redefining instalment payment through checkout financing for online shopping.

What are the opportunities that exist for e-commerce and Fintech companies amid COVID-19 pandemic?

Regardless of the sector, every company needs to be in an intensive learning mode. The last few

months have become a landmark for shifting consumer behaviours and the pandemic is serving as a catalyst for change. E-commerce companies have the unique opportunity to study these shifts in order to learn what value means to their consumers, what products and categories they are favouring, what kind of price sensitivity they have and so on. This will enable them to package and design offers that really respond to the psychological mindset of the consumers. Today, we see consumers selecting more affordable alternatives; prioritizing functionality over expensive name brands. Ecommerce companies that focus on curating their merchandise will see more conversion than the ones who do not.

All signs point to fintech being a standout sector during this pandemic and beyond. The sector is well-positioned for the new global reality that is starting to emerge. Fintechs have the opportunity of innovating to create new products that address the rapidly evolving economic environment. Although, it’s imperative they critically reexamine their business models. Digital lenders may soon realize that the historical data they use in making underwriting decisions could be less reliable in today’s environment and they will have to adjust their credit risk models.

What has been your experience as a female founder of tech startups?

It’s been a ride. Trying to build anything from scratch is always challenging with a lot of learning curves. Navigating two very complex industries like Fintech and E-commerce in Nigeria with very few visible female role models has not been an easy feat. It takes guts, an unusual kind of resilience and the right team who wants to win as much as you do to succeed as a tech startup founder. With digital technology businesses, there are so many ‘’ behind the scenes’’ that nobody talks about. Consumers only interact with the final product or service. I have been fortunate to have good mentors and a strong support system who help out when it gets tough.

However, I have found that being a non-technical female founder of tech startups has been more of an advantage than a disadvantage as many people would like to believe. This allows me to see our products and services from a consumer’s vantage point and I can’t overemphasize how important this is. Women have strong innate abilities and intuitions and I’ve learnt to make them work for me. I’ve also learnt to play to my strength and focus more on the business side of things. Overall, it’s always rewarding when you see your product or service solving critical needs for consumers.

What are some of the challenges that are daunting the growth of startups in Nigeria, especially those in the technology space?

It may sound cliche, but some of the top challenges facing tech startups in Nigeria are mostly centered around funding, infrastructure and talent. Access to funding has always been a constraint to the growth of many startups and this is not peculiar to Nigeria alone.

Why do you think Nigeria has lagged its peers in financial inclusion drive and what are your recommendations?

Nigeria remains an exciting market for digital financial service innovation and has been growing at an impressive rate, but digital financial inclusion still has a long way to go to truly reach the low-income and unbanked segments. Nigeria’s unbanked population have largely been excluded from access to fintech products because as a sector, we are still far from finding productmarket fit to reach these underserved population and facilitate their financial lives in a holistic way.

For many years, the delivery of financial services has been done the same way. You go to a financial service provider to save or access a loan product and once the exchange happens you are left to get on with life. While enlightened and educated people may tolerate this transactional business approach, it is unlikely to work with the unbanked. The unbanked population is characterized by the low level of trust and there has to be a deliberate attempt by financial service providers to gain their trust. It is not like they are not ‘’ banking’’, they just trust the informal methods that have worked for them for centuries better. They save in less formal ways e.g. individually at home, or collectively through savings groups and also prefer to carry out their economic activities using cash.

Another reason for the weak uptake of digital financial services is because fintech innovators concentrate in the urban areas. This may be because the products and services they offer are designed for skills, resources, and access points that most unbanked don’t have.