Abimbola Pinheiro is the Founder and CEO of 03 Capital Limited, one of the first FinTech companies in Nigeria. In this interview with journalists including Iheanyi Nwachukwu, he speaks on the company and the financial industry. Excerpts
FinTechs have developed solutions that address specific challenges. How can you describe the impact of such solutions on the financial industry?
We see 03 Capital as a bridge between the old brick and mortar banks and the future mobile or any kind of payment system. Because Nigerians have affinity to cash, the next thing to cash is card. At 03 Capital we offer credit card or prepaid card that works on any platform. We now have a mobile app that mirrors that card on your phone.
So everything you can do on your card, you can do on your phone, including to transfer money, withdraw cash from the ATM, use a POS terminal, look at your balances, change your PIN, everything. It is that convenience that 03 brings to the fore for people.
So, in terms of innovations, 03 is like a financial supermarket, what some people will call a digital bank. Because we offer lending and saving services, we offer money management services, soon we will offer remittance services. And that is just the beginning. In the future we are going to expand these services to go global. So, Nigerians can take an 03 card from Nigeria and go anywhere in the world and get the maximum benefits available.
Tell us about your company and your experience over the years?
O3 Capital Nigeria Limited is a financial services institution that offers various consumer loans using the credit card as its delivery channel. We are the first non-bank card issuer in Nigeria, and we aim to be the preferred credit card issuer for years to come. Our credit cards work on the existing Interswitch network, which means they are compatible on all ATM, POS and Internet payment sites in Nigeria.
When we started about seven years ago, the idea of FinTech was very strange to the Nigerian market. Not many people knew what to do; even the regulators were not sure how to place us. So it has been a long journey. The market acceptance has been tough, the culture of credit card has been growing gradually in Nigeria, but now in 2021, there are more companies, which we can be compared with. People now understand the concept of FinTechs and cards and payment solutions much better. So the market is growing and is expanding accordingly.
How will you describe the success rate of the financial inclusion drive of the Central Bank of Nigeria, and want are the roles of FinTech like O3 Capital in achieving financial inclusion in Nigeria?
The CBN initiative is a very fanatic strategy. I understand that we have about 40percent unbanked in Nigeria, 40percent of 200 million, which comes to about 80 million people. What people don’t realize is that 80 million people unbanked do not translate to 80 million poor people. These 80 million people have their own economy and they thrive in that economy in their small ecosystem. Imagine 80 million people having N1,000 a day in the banking system. That is like N80 billion every month. And some of them have a lot more.
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FinTech players like O3 Capital are breaking new grounds with lots of innovations. How will you describe the growth of FinTech in Nigeria?
It has been fantastic. I believe outside of America and China, Nigeria should be in the top five of FinTech giants in the world. It has been amazing. It is as if finally the energetic minds of young Nigerians have been able to express themselves. And luckily the environment now enables such innovations and practice.
So, it has really been amazing. I mean, we have gone from finance to management, to investment. It’s truly unbelievable, frankly. And the good thing is that as a nation FinTechs can only help our economy. In the whole ecosystem, we have been lucky, the Central Bank of Nigeria (CBN) under this dispensation has been quite enabling. And the infrastructure is catching up, the telcos are growing bigger, the Internet provision is with more bandwidth. So, it is really a lot of things coming together and making it work.
One major challenge of FinTech players remains access to funds from local and foreign investors. How has this trend affected the growth of FinTechs in Nigeria?
I think the challenge is breaking by itself. I will say that there are not much local investors in FinTechs currently. Like you said, it is hard to convince Nigerians about this concept. We have had our own fair share of issues when people don’t understand what credit card is or how it works. But, we have had a few Nigerians dabble into it and that is not bad, and I am sure it will get better as time goes on.
But for the foreign investors, they have seen virtually all these concepts and innovations succeed everywhere else in the world. And what Nigeria has going for it is the population – 200 million.
The foreign investors see the market and they are saying, ‘if this can work over there, it can work over here.’ There is no way it will not succeed. We need to take that gamble that bet. I believe that the same way we have gotten almost $600million dollars investment in the last 7 years, which is huge, we will overcome similar challenges. I can say that the difficulty in raising funding before is getting easier these days. Now, investors are trooping into Nigeria and they have brought funds and looking for FinTechs to fund.
As a player in the FinTech industry, what aspect of the market is O3 Capital pulling its weight on? Also, what is the mission and proposition of O3 Capital to customers?
03 Capital as a company has the saying, what we call a mission, “An 03 Card for everybody.” Every Nigerian should have a credit card. We, for instance, offer access to funds and convenience. We believe that no matter your status in life, there is an O3 card for you. O3 Capital is a financial supermarket, we offer prepaid card, we offer the credit card, and we also have other financial products. We say if you are a student, you can get a prepaid card, learn how to use cards and practice so when you have your card it makes it easier.
With the credit card, young career holders, family men, executives, everybody needs something. One thing we say in 03 card is, ‘life happens.’ And what people need to understand is that for 03 Capital, an 03 card is not what you get when something happens to you. It is a life companion, so that when life happens you are ready. Whatever life throws at you, you are already. You take care of it and you don’t break your stride. That is what 03 Capital cards do, they give you that comfort. It is a life companion tool. It is not about loan or credit; it is actually life companion. With your 03 card, even if you don’t want to use the loan, we don’t charge you anything, the card is there in your pocket. And in some places, like airports and supermarkets, you get certain discounts and benefits by using an 03 Card. If you have money in the other bank, you move it to that card, and you get all those benefits.
Industry players have called for closer collaboration between the FinTechs and the banks. Do you see the need for collaboration, and how best can the collaboration drive Nigeria’s digital economy initiative?
Well, for me as a person and at 03 Capital, we were at the forefront of this collaboration quest because everything is an ecosystem. No matter what you do, there is always someone that can add more value to it. FinTechs are more of the last man to get to the end user. For instance, we do cards and all that, but at the backend, money has to move from one bank to the other. So, if we don’t collaborate with the banks, it will not help.
The telcos are there providing services, we collaborate with them. You also know that our POS terminals will not work without the telcos. The truth is no single entity can be everything. Banks do wholesale banking, FinTechs like us do the retail to the end users, everybody wins and everybody makes their money. And the thing is that everybody is an expert in a certain area. I have told some banks in the past to leave retail banking to the retail experts.
Some banks have tried to do some funny FinTech arrangements; they have not had good experiences. But at 03 Capital, we have default of less than 4percent, which is amazing. This is because we know what we do, we know how to analyze our profiles, we know what algorithm to ask for. So, there is no way you will not collaborate. And it is only a matter of time really, because you can’t be everything. The telcos learnt this long ago.
You mentioned collaboration, when you give an 03 Card to somebody in the village and there is no ATM in that village, collaboration has made it such that there are agent bankers that have POS terminals that can give them cash. So, it all comes together.
There is a federal parastatal that we are having something to do with that deals with Social Intervention Fund, and there has been discussion around people not appreciating what they are doing. I told them, ‘take an 03 prepaid card, put your colour and design on it and give it to these beneficiaries.’ So, when anybody comes to ask the beneficiaries five years down the line that, ‘what happened to you and this scheme,’ they can say, ‘this is the card that I got where my money comes into.’ If you give somebody cash, the cash disappears and there is no evidence.
Your company provides the average Nigerian with access to funds using the O3 cards; how does the card operate and how accessible is the card?
Like I said earlier, our motto is, ‘a credit card for everybody.’ All you need to do is download the app and apply for the credit card. We give limits between N100,000 and 5 million naira depending on your cash flow or your salary. And within 24 hours instantly you get that virtual card on your phone and you can start to do your transactions from there. In a day or two, you will get the physical card.
You can now take this card and call our call centre to activate the card. Then you go to the nearest ATM to change your PIN. That card is with you for two years. You don’t need to call us; we don’t need to see you. As you spend, we charge interest, if you don’t spend, there will be no interest. For example, we give you a card of N100, 000 and you spend N50,000, we will only charge you interest on that N50,000 and it is not a flat rate.
If you use that card for two weeks, that’s 14 days, we charge you interest only for 14 days on that N50,000 and we charge at 0.013 percent per day. So, it is very, very cheap and convenient, it is cheaper than loans. A lot of people don’t realise that the credit card is actually cheaper than loans. So, you have it, you pay it back, is in your pocket, you don’t use it again. You want to pay school fees, after three months, you take it to the school, pay your school fees and you move on.
And when you pay back, you don’t have to pay back everything you spent at the end of the month. You are allowed to pay back, only 10 percent of what you have spent. If you spend N50,000, you pay back N5,000; the N45,000 left you can roll over to the next month. If you have money, pay the whole thing down to zero and your interest will stop.
So, it is really a life companion. We all have emergencies, so we all need a credit card. We tell people that with 03 Card, you live a better life. And some of these things I say are personal experiences. We have had people that are sick and they don’t want to go to hospital because they have to pay for test. What will they do? They go to the pharmacy and buy any drug.
But with your 03 Card, take the test, see the doctor, you pay it over two years. So, you have a better quality of life. Everything happens to everybody, for a man sometimes, you don’t have N50,000 in your pocket. You can’t be asking colleagues and family for everything. Take care of your business quietly, even your wife would not know. It gives you a better quality of life. That is why our slogan now is ‘With 03 Card, live your best life’. That is how it works.
The average Nigerian is the target of O3 Cards, yet majority of Nigerians in that category who are mainly traders, are not tech-savvy. How simplified are the features of O3 cards, how can the illiterate or market woman take advantage of the products that you offer?
Like we say, 03 Card is for everybody. For those that have smart phones and internet services, just go to the site or any app store, download and move on. For those that don’t have that access, we have physical marketers that go out and onboard these people. And like you said, the ecosystem where banks are used to giving people debit cards, you know, people are used to having cards work.
So, the average woman in Mushin market can take a card, put in an ATM or POS and do her transaction. We now have a version of our cards such that if you are not literate you can operate in the ecosystem. There are cards that we call PINLESS cards that we will give you, we put your limit and put your form inside and the PIN process is easy. So, it takes away that stress of not being literate, it’s just easy business.
Like I said, these people, even though they are unbanked, actually have a big economy that revolves around them. So, that card enables them to process that economy through a structured system, and the whole country benefits. You know they say that money not in circulation is paper. Now we have that policy and we strive to try to achieve it.
Given the fact that there are several channels open for financial transactions in Nigeria, what makes O3 cards unique and why do you think Nigerians need O3 Cards for financial transactions?
When you say there are different kinds and different conditions, yes, there are. But you see very rarely do you find a company like 03 Capital that will offer you all the channels in one spot. The common channel now is mobile. We have an app that does everything your card can do. We have a web app; everything you want to do is possible there.
Then you have the card, which in my opinion is not going anywhere anytime soon. China, US, UK are far advanced than we are; they have all these FinTechs more than we do. But, that plastic card is still the mainstay and it is going to be so for the next 10 to 20 years.
And if you look at cars for instance, a car is a car but some people have ‘Tokunbo,’ some people have Honda, some people have Toyota, and some have Jeep. The market is so big, everybody can use other channels and compete. But, what we have to address everybody’s common need and whatever you want to do.
When I tell people that with an 03 App on your phone, you can withdraw cash from ATM without a card, they are amazed. We take innovation to the next level, and it is going to continue to build up like that. And by the time competition comes, we have moved on to the next level. There are some things that we want to do either by Q4 or Q1 next year, it is going to change the market. But I am not at liberty to discuss it at this point, but watch this space.
Most Nigerians are still skeptical about using debit cards for financial transactions because of the perceived online risks associated with it. How will O3 Capital convince such Nigerians and others to use cards for financial transactions?
The good thing about 03 Capital is that we are a licensed CBN Financial Institution. So there regulations we must to adhere to. We offer credit cards; the credit cards contain customer’s personal data and we adhere to the Know Your Customers (KYC) policy.
Also, there are some regulatory certifications and levels that you must attain before you are allowed to operate. There is the PCI, DSS, there is data security that deal with encryption. It is a long list and we are able to meet every criteria required of us. Our systems are firewalled against the Internet or hackers. For there to be fraud on our platform, a customer must have given somebody his password. The customer must have given his card and PIN to someone. Otherwise, there is no way they can hack into your mobile phone or mobile app, they can’t hack into it. We have been doing this for seven years and we don’t have one case of fraud. If that is not a testament of safety, I don’t know what is.
There are some other people out there who might not have heard about 03 Capital, what do you have to tell people like that?
If you have not heard about 03 Capital, you have been missing out; I will tell you for a fact. We are not trying to brag. But you see, life actually does get better with 03 Card. Let me give you an example why 03 Card is fantastic. Part of our terms and condition is that if you have our credit card and you lose your job, we will give you six months to get back into the work system, to find another job, and then we kick off from there.
03 Card is very humane. I am talking about features that come out of personal experiences. Things happen in life so if you have our credit card and you lose your job, don’t panic, let us know, we will stop your interest charges, give you a six month period, when you are re-engage, we continue.
Now there are some places that you will go that if you buy one item, you get one free. There are some places that you will go, if you ask for first level, because you are using an 03 Card, they will give you the next level. So, there is so much benefit to the card. People should not think of 03 Cards as taking loans, it is way better than that.
Students that use our cards can have their parents send their money on the card, its that simple. You enter plane in Lagos to go to Abuja, the person that wants to send money to you, by the time you land and you go to the ATM, the money is in your account and you move on. For banks to have come to us to study what we do, we are not experts in everything like I always say, but in this Credit Card Market, we are experts.
In fact when we started credit card business, Interswitch did not have the credit option. That is why if you use 03 Card at any ATM or POS, you have to pick currency option. So, it can only get better. Credit card is a culture everywhere else in the world; every Tom, Dick and Harry has a credit card. But in Nigeria, it seems to be a big deal. Worst case you must start with a small limit once you use it well, they will increase it for you.
When something happens, when you should be running up and down looking for money, use your credit card. 03 Card gives you that comfort. You should not go anywhere without that 03 Card. You go abroad and see Nigerians on holidays and you will be wondering how they are doing it. With your 03 Card, you get to do those things.
You want to do something, you don’t have enough money, you save for the next six months, by the time you come back to do that thing, it is either it is no more in fashion or prices have changed. But with 03 Card you can get that immediate satisfaction and benefit. Then that savings you want to do, call it reverse savings. What you save on a monthly basis, pay it into you card and you start enjoying the benefit today. With 03 Card you are ready now. It is not just a fashion card, it is a massive tool. So, if anything happens, just do it and you move on, and that savings you want to do, call it reverse savings.
What other message do you have for your customers; just to assure them and those who are yet to come onboard the 03 Capital revolution?
I like the word revolution because that is what we use regularly here. The thing is if you join the 03 revolution, your life will never be the same. This is because a lot of things are there for you to do to take business opportunities. Most of us can’t afford the kind of schools we want our kids to go. But, if you save for three months, we can pay the school fees for you. You now downgrade your children’s school, for what? Take a our credit card, pay the school fees and pay us back over a three-month period. Just join the 03 Capital revolution then life will never be the same again, and those that have joined, you have not seen anything yet.
There are some massive things coming up; even when I think about it, I start to smile to myself. I know it takes a while, because even me, I didn’t have a credit card until I started working with 03 Capital. And the good thing about 03 Capital is that you don’t have to change where your bank is to get our card. Stay with your bank wherever it is, that is what 03 Capital offers; we offer freedom.
There is nothing more important than financial freedom. We are different because if you collect a credit card from bank A, you must have an account with that bank. But with 03 Capital, you can have an account with any bank in Nigeria. We will give you a card, we have all the required process to ensure whether you are a good person, or not, your credit history and everything works. I will say it again, seven years and we are still here, we must be doing something right.
Despite the several channels open to Nigerians for financial transactions, coupled with CBN’s awareness campaigns to deepen financial inclusion, the Nigerian economy is still regarded as cash-based where most people prefer the use of physical cash. What is your take on this, and how can the narrative be changed?
It is going to take the collective efforts of all stakeholders – CBN, Banks, the FinTechs and the people. Because really cash is king and some of these doubts or lack of trust comes from the infrastructural challenges we have in Nigeria, which everybody understands. You go to the ATM, and they tell you no network, no POS, but you know you have money. But if the cash is in your hand, it is not going anywhere. So, it is only a matter of time, because if you look at CBN numbers, the volume of online or POS or e-transactions have more than tripled in the last few years. There are less cash in circulation now, so we are getting there and it is only a matter of time.
