Access to financial services sign of development in Nigeria – experts
Experts in the Nigerian financial technology (Fintech) ecosystem have described the current growth in adoption resulting in higher access to financial services as a sign of development in Nigeria.
They stated this during the virtual couch session at the recently concluded Lagos Startup Week, hosted via Twitter Spaces by Benjamin Dada, the Nigerian Country Manager for Stitch, Dayo Ademola, managing director, Branch Nigeria joined other stakeholders in the fintech industry to discuss the theme, “What next for Fintechs in Africa?”
Ademola stated that access to financial services has been a sign of positive growth in underdeveloped nations while discussing the significance of financial services in the society.
Celestine Omim, CEO of Klump, on his part stated that the rise of fintech has been encouraged by the expansion of cellphone usage and the Central Bank of Nigeria’s cashless policy.
Olusola Amusan, Co-founder Vesti, added that the lack of access to financial institutions faced by many of the Nigerian population provided the opportunity for fintech growth.
Nubi Kay, startup program lead at Paystack, stated that fintech is the backbone of e-commerce, affirming that 60-70 percent 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 posited that its growth can be attributed to huge gaps that need 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.
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. “At branch, we have built a really good model that is getting better daily at scoring people. As we don’t 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,” stated Ademola.
According to her, since inception, Branch International has issued over six million loans to Nigerians while offering investment opportunities at their fingertips. The digital finance app offers services such as small loans of up to ₦500,000 ($1200) and long and short-term investment opportunities with one of the highest ROIs in Nigeria.