Financial Technology (Fintech) companies in Nigeria have raised millions of US dollars in the last few years, create jobs, increase foreign exchange inflow and taught Nigerians ease of doing financial transactions just in time without banks’ usual queues.
Below is the list of 13 leading fintech companies in Nigeria.
It was established in 2017 by Iyin Aboyeji and Olugbenga Abgoola and is headquartered in San Francisco. It provides payment services to banks and businesses to ensure seamless transactions with customers. It raised $170 million in its latest round of funding to increase its customer base in the global market. It initiated Batar. It allows users to create virtual US dollar debit cards within seconds for one-time or regular usage. Unlike other platforms, it requests a working email address and phone number as the service relies on customer details already obtained by a user’s bank.
Interswitch, headquartered in Lagos, integrates digital payments. It was founded in 2002 by Mitchell Elegbe. Visa in November 2019 invested $200 million and will recoup 20 per cent stake from the company which is valued at no less than $1 billion.
PayStack was established in 2015 by Shola Akinlade and Ezra Olubi. It makes payment processes consistent for both consumers and the businesses they are attempting to pay.
Paga was founded in 2009 by Tayo Oviosu but launched in 2011. Through Paga, you can pay bills, make bank deposits and even pay in certain stores. It acts as a mobile wallet where customers perform transactions on their mobile devices.
Carbon, formerly known as Paylater, is owned by One Finance and was founded in 2016. It is a loan app which gives short loans through its mobile app. Use of mobile phones to obtain loans makes the process faster and easier.
Remita set the pace for fintech companies in Nigeria as it was developed by system specs in 1991 by John Obaro. It assists SMEs, multinationals, state governments, government agencies, NGOs, educational institutions and individuals to receive and make payments electronically.
VoguePay was established in 2012, it is accessible to local consumers with a simple and minimal effort platform as its principal selling point.
OPay is owned by Opera. It entered the fintech market in August after acquiring a controlling stake in PayCom. It was founded by Telnet Nigeria.
Lidya is a mobile-first technology with strong customer experience and proprietary credit scoring.
Kudi Money was rebranded to Kuda Bank. It was founded in 2017 by Babatunde Ogundeyi. It performs similar functions like other fintech companies. The start-up raised $1.6 milion in 2019.
It was originally known as Piggybank.ng, before it became PiggyVest. It allows debit cardholders to save little amounts of money frequently with minimal effort. It automates the process of saving tiny amounts daily, weekly, or monthly you. It was founded in February 2016 by Ayo Akinola, Joshua Chibueze, Nonso Eagle, Odunayo Eweniyi, and Somto Ifezue.
This is a mobile banking platform that gives loans and credits. It was founded in 2017. It has a team of people across Paris, France, and Lagos, Nigeria.
Chipper Cash was founded in 2017 by Ham Serunjogi and Maijid Moujaled and it is headquartered in San Francisco, California. It enables free instant cross-border mobile money transfers in Africa as easy as sending a text message.
Visa To Acquire Swedish Open Banking Firm Tink For €1.8B
Card giant firm, Visa is set to acquire Tink, the Swedish open banking platform, in a deal worth €1.8 billion (roughly $2.15 billion).
The news comes less than six months after the termination of Visa’s planned $5.3 billion acquisition of Plaid, the San Francisco-based fintech firm – a deal that had encountered significant opposition from the U.S. Department of Justice.
Like Plaid, Tink’s platform allows customers to connect with more than 3,400 banks and financial institutions to access aggregated financial data, helping them to build innovative personal finance tools.
“Visa is committed to doing all we can to foster innovation and empower consumers in support of Europe’s open banking goals,” said Al Kelly, CEO and chairman of Visa. “By bringing together Visa’s network of networks and Tink’s open banking capabilities we will deliver increased value to European consumers and businesses with tools to make their financial lives more simple, reliable and secure.”
As part of the Visa deal, Tink will retain its brand and current management team, as well as its headquarters in Stockholm, Sweden.
Tink last raised money in December 2020, when it secured €85 million (roughly $101.5 million) in a round led by Dawn Capital and Eurazeo Growth.
The €1.8 billion transactions, which includes cash and retention incentives, are subject to approval from regulators. Visa will fund the transaction in cash.
Tink’s business model is in part enabled by the EU’s Revised Payment Services Directive (PSD2), which was put into effect in January 2018. The legislation requires banks to give third parties access to the customer data they store, with the aim of driving competition and innovation in financial services.
But the PSD2 framework also paved the way for new payment functionality that allows consumers to make payments directly from their bank accounts without having to rely on intermediaries, like card networks.
In recent months, account-to-account payments have garnered a lot of attention from crypto startups, which see it as a potentially cheaper and easier method of funding wallets.
Bank CEO Speaks to Cultural Change Required as Economy Moves Toward Digitization and CBDCs
Last month, the Kenya Bankers Association had their regular CEO Chat, this time with Alakh Kohli, CEO of M Oriental Bank. During the exchange, he was questioned about the move towards digital products and services, which would include cryptocurrencies, digital assets, and central bank digital currencies. He noted that there was a significant educational component to the change, and that while many in the economy were already participating in it, a greater cultural shift would need to occur as we trend towards digitization.
“Kohli is certainly right, in terms of the need to create cultural change as our financial system further digitizes. There is a sizable segment of the population in every country which prefers in-person transactions. That is exacerbated by the threat of hacking and identity theft, particularly among the eldest in our societies. In places like Africa, that is even more pronounced because of lesser access to digital devices,” noted Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.
In the interview, Kohli noted that “one of the challenges we are seeing is that while there is a lot of interest and focus on getting digital products, there are always a group of clients that still prefer to do their transactions physically…one of the biggest challenges we face is introducing such clients to digital banking and encouraging the uptake of these products for such clients. We have done this through one on one sensitization and educative trainings and discussions with our clients. It speaks to a culture change which is required.”
“As we begin to see governments move towards CBDCs, and we will, there will be a necessary shift in cultural preferences. Older citizens and those without access to smartphones may find themselves outside the mainstream as central banks issue digital currencies. Even during the pandemic, when areas found themselves with a coin shortage, some businesses discouraged — or even stopped accepting — cash. Governments will favor the digitized currency for the many advantages it will provide, not the least of which will be a less expensive and more centralized financial infrastructure. The citizenry will likely find significant benefit, as well. For example, imagine how much faster stimulus payments, in places where they were issued, would’ve been processed if there was already a CBDC in place,” said Gardner.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“While there will be a cultural and educational aspect to any CBDC rollout, I think that the populace will, by and large, enjoy the benefits of digital assets. Even beyond central bank digital currencies, the ability to participate in digital assets will be huge. For example, the ability to chop up real estate investments into small chunks will allow Main Street investors an inexpensive way to own a piece of a strip mall or multifamily development in a much more liquid fashion than any investment vehicle currently available. That’s the technological power of blockchain,” explained Gardner.
Lack of Digital Infrastructure and Mobile Services Affecting Remittance Risks Leaving Millions of Rural Families in Poverty – IFAD
Despite a massive increase in migrants sending money home via digital transfers due to the COVID-19 pandemic, millions of their rural family members struggle to access mobile banking services which could help lift them out of poverty.
The President of the UN’s International Fund for Agricultural Development (IFAD) has called for urgent investments in digital infrastructure and mobile services in developing countries to ensure rural families are not left behind.
“Migrants have shown their continued commitment to their families and communities during the pandemic with more remittances transfers made digitally than ever before,” said Gilbert F. Houngbo, President of IFAD, speaking on the International Day of Family Remittances. “Unfortunately, families in rural and remote areas – where remittances are a true lifeline – the battle to access cash outlets or even more convenient alternatives such as mobile money accounts. Governments and the private sector need to urgently invest in rural digital infrastructure to address this.”
Mobile remittances increased by 65 percent last year, rising to US$12.7 billion. This change was driven by a switch from cash due to lockdowns that limited informal channels and social distancing rules for senders and recipients alike. In spite of the global economic recession due to the pandemic, migrants continued to send money home to their families, with remittances in 2020 reaching $540 billion – a drop of only 1.6 percent compared to the previous year.
However, in many countries, people living in remote rural areas have sparse local access to banking services or limited mobile connectivity. In addition, there is limited availability of agents offering mobile money services such as payouts in cash. Often mobile money service providers are only located in urban centers. This means millions of poor, rural people have to travel long distances to towns or cities, often at significant cost, to receive the cash sent digitally by their migrant family members.
Digital transfers are cheaper than traditional cash transfers, and mobile banking services also provide the opportunity for migrants and their families in their countries of origin to access useful and affordable financial products to better manage their finances, including savings, loans and insurance.
Across the globe, 200 million migrants regularly send money to their 800 million relatives. This plays a crucial role in their lives and livelihoods. Almost half of these families live in rural areas of developing countries, where poverty and hunger are highest. Families use the funds sent by migrant workers to cover basic household needs such as food, housing, school and medical bills, as well as to start small businesses. These resources can often transform both families and local communities.
“While the pandemic accelerated the adoption of digital transfers and mobile money accounts, it also highlighted pervasive gender inequality,” said Pedro de Vasconcelos, the head of IFAD’s Financing Facility for Remittances. “Research shows that women are 33 percent less likely than men to have a mobile money account. We must focus on closing the gap by addressing the barriers that prevent women from accessing and using mobile financial services.”
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