Nigeria Fintech Census 2020: Profiling and Defining

NIGERIA FINTECH CENSUS 2020
PROFILING AND DEFINING THE FINTECH SECTOR
START
02
Introduction
07
About the
research
36 Click the
Contact us
circle to go
to the 08
The Nigerian
section FinTech
landscape
31
Future focus
20
Drivers of
success
| 1
About the The Nigerian Drivers of
Introduction Future focus Contact us
research FinTech landscape success
Introduction
BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 2

Fast facts – The Nigerian FinTech Landscape in 2020
Sector profile Total Industry gender profile Capital (multiple response – excl. don’t know) Investment by deal stage
c.290 FinTechs
Top 10 focus sub-sectors Gender (workforce participation) Capital raised to date Venture Capital Most recent funding round
57% funding
56% 44% 55%
Payments and remittances 43% male female of FinTechs have
All-male founders $0 -$50,000 9% Angel 10%
Financial software 27% $50,001 -$500,000 9% Series A 24%
Talent $500,000 - $1m 9% Series B 14%
Digital banking 23%
# of employees $1m -$5m 22% Series C 3%
Lending - consumer finance 23% $5m - $10m 17% Series D 3%
44% 33% 11% >$10m
Digital wallet and prepaid cards 20% 11% 35% Other funding 45%
1 to 50 51 - 150 151 - 250 250+
Personal finance management 20%
Monthly burn rate Profitability in 2019 (Net Profit Margin)
Online investments 17%
Agree that their businesses are facing 29% 33%
14% 10% 14%
Analytics and big data 13% 54% an acute shortage of digital skills
Average monthly
burn rate greater than >$50k
US$50K for c.67% of 0 - 10% 10% - 20% 20% - 50% > 50% Not
profitable
base sample FinTechs
Lending - SMEs and corporate 13%
Cryptocurrency 10% Revenue (Post revenue – excl. N/A) Active customers Remain compliant as
Regulatory 53 %
business grows / transforms
$0 - $100,000 10% 1 to 500 500 to 10,000 Above 10,000 outlook
Ensure sufficient capital and
$100,001 - $1 million 14% 50 %
End customer profile liquidity

B2C $1 million - $5 million 19% 14% 14% 72%
Manage high-frequency
17% Retail Consumers 83% 43
> $5 million
%
57% regulatory changes
Sophisticated Investors 7%
Both Company stage Relationship with incumbents (past 12 months)

73%
Banks and OFIs 63%
of FinTechs say their relationships
Corporates 60% 52% 45% with incumbent banks to have
85% 15%
B2B
SME and other startups 57%
Post- Pre-
3%
53% contributed to the growth of their
business through stronger
Government 27% revenue revenue Better Same Worse
10% relationships & collaboration

The Nigerian FinTech Industry is maturing and increasingly attracting funding from local
and foreign investors
Key business challenges in 2020 Median revenue growth (excl. didn’t answer) Future outlook
Top 3 challenges Year on year post-revenue growth expected to improve Nigerian FinTechs continue to focus on overseas expansion and
significantly fund raising in the next 12 months
30% 27% 24% 0 - 20% 21% Top 8 markets for potential expansion (excl. don’t know)
Attracting suitable Regulatory outlook Building partnerships 21 - 80% 38%
or qualified talent with established
players 81 - 100% 14%
101 - 200% 17%
Age of company (excl. didn’t answer)
201 - 499% 3%
500% + 7%
11% Revenue decline 0%
Less than 2 years
2 to 5 years
Above 5 years Post revenue FinTechs Profitability of post revenue FinTechs
56% 33%
of Nigerian
24%
Profitable
85% FinTechs are
post revenue 76% Not Profitable
Female participation in the FinTech workforce Profitability of FinTechs (post-revenue)

A large proportion of FinTechs are profitable this year
Size of next funding round (excl. don’t know)
% of female % of female full-
founders time employees
$0 -$50,000 5%
0 - 10% 13% $50,000 -$100,000 5%
44% 10% - 20% 29% $100,001 -$500,000 19%
20% - 50% 33%
12% $500,001 - $1m 5%
> 50% 8% $1m -$5m 29%
Founders Full-time employees Not profitable 17% >$5m 38%

Welcome to the Nigeria FinTech Census 2020. When FinTechNGR engaged us to work with them on the
Nigeria FinTech Census 2020 project, we were honoured,
FinTech Association of Nigeria in collaboration with EY
excited and committed. We anticipated that the FinTech
Nigeria have successfully delivered this first-of-its-kind piece
sector would be an engine of growth, and a driver of
of research work that attempts to provide detailed, industry-
innovation and transformation across the financial
backed analysis of the Nigerian FinTech industry.
services sector.
This report was commissioned to better understand the
For the first year, the Nigeria FinTech Census provides
needs of the sector and to catalyze the next steps in the
an exciting contribution to this commitment and
evolution of Nigeria’s FinTech landscape. It also forms a
recognizes the strong global connection within
critical part of FinTechNGR’s efforts to foster a thriving
EY supporting the FinTech industry. The Census provides
FinTech ecosystem. Nigeria’s FinTech industry has emerged
insightful research conducted in collaboration with the
as one of the most important FinTech ecosystems within the
Nigeria FinTech community by EY & FinTechNGR. It
African continent and continues to attract attention globally.
delivers a powerful fact base, combined with broader
The Nigeria FinTech Census report also attempts to define insight to inform and inspire those involved with the
the overall shape of Nigeria’s FinTech industry. It gives sector. We have also incorporated views from major
empirical detail about the established and emerging sub- Nigeria financial services organisations, investors and
sectors within Nigeria’s FinTech community and helps track regulators.
maturity of FinTechs across dimensions.
The analysis, views and recommendations expressed in
I am grateful for the important work undertaken by EY in this report were produced by EY and informed by over
producing this report. It provides essential insight and a 60 survey responses and interviews held with FinTech
helpful baseline for the industry. We hope you enjoy reading firms, incumbents, investors, regulators/ policymakers.
the report and learning about the dynamic FinTech industry The EY team is grateful to all who contributed their time
we have here in Nigeria. and made the production of this report possible.
Ade Bajomo Dapo Adewole

President, FinTech Association of Nigeria Partner, Technology & FinTech Leader West Africa, EY

Executive Summary
The research in this report shows that the analytics, cybersecurity and software directives and initiatives including the
Nigerian FinTech industry is nascent compared engineering are among the most difficult to presence of digital public infrastructure to
to FinTech ecosystems globally. However, it is find to a greater degree, presenting barriers facilitate financial services inclusion and
maturing at an exponential pace. This is to growth for FinTechs, and an area where innovation)… More than 50% of the FinTechs
reflected in the profile of the firms, the breadth many believe more support is required. interviewed say there is a need to amend
of coverage, the increasing level of global regulations in certain areas such as capital,
► Capital (the availability of financial
connection and rising levels of profitability. KYC and reporting requirements. Niche
resources for start-ups and scale-ups)… A
Confidence in the industry is rising, and this is players also say their prevailing concern is
FinTech’s ability to raise funds is fundamental
underpinned by some flagship success stories around the lack of clarity and certainty on the
to its growth, and growing organically is a
recorded in recent time. It is estimated that regulation of emerging segments such as
battle against time. Our findings suggest that
Nigerian FinTechs raised $439 million in 2020 cryptocurrency, digital ledger technology,
foreign investors are more involved in the
alone, equivalent to 20% of the amount raised by etc. In contrast, the Nigerian regulatory
FinTech space than their local counterparts,
all African tech startups1. bodies posit themselves to be highly
with a higher percentage (57%) of FinTech
supportive of innovation. A notable update is
A key theme in this maiden edition of the Nigeria funding coming from overseas. There is also a
the presidential assent in November 2020 to
FinTech Census 2020 is that it was designed to funding skew to the more established players,
the Banks and Other Financial Institutions Act
gather key insights directly from FinTechs and with higher percentage of post-revenue
2020, which provides regulatory guidance for
the incumbent major players, charting key areas FinTechs receiving more funding.
financial services businesses that are
of growth, as well as potential challenges. Data
► Demand (end client demand for FinTech conducted digitally, virtually, or electronically
was gathered on the specific areas of talent,
services across consumers, corporates, FIs only. A large proportion of FinTechs say the
capital, demand and policy & regulation.
and government)… Consumption of FinTech financial industry in Nigeria is overregulated,
We have explored in detail the dynamics around services within the Nigerian ecosystem and may stifle innovation and global
these four pillars that underpin the burgeoning continues to grow and evolve at pace, with a competitive advantage.
success of the industry. number of FinTechs positioning themselves
The Nigeria FinTech industry is maturing and
by offering credible B2B and B2C options
► Talent (the availability of technical, financial continues to grow. There remains a high degree
across consumer parallels. Usage of FinTech
services and entrepreneurial talent)… of optimism, however the industry is facing some
services by incumbents also continues to rise,
Attraction and retention of talent emerged as scale-up challenges. Two fundamental
as notable banks continue to partner with
a major top tier challenge for Nigerian foundations for continued success will include
FinTechs to cover the key customer
FinTech organisations. Nigerian FinTechs the level of effective collaboration with major
segments.
thrive on recruiting onshore talent within the players and the level of government support.
domestic market. Skills such as data ► Policy and regulation (all government

Introduction research Future focus Contact us
FinTech landscape success
About the Research

targeted at:
Background
• Providing an overview of the FinTech landscape and its enablers;
As part of our common innovation agenda, EY and FinTechNGR have collaborated to
conduct a census of the Nigerian FinTech landscape. This exercise was aimed at • Identifying the top challenges FinTechs must navigate to succeed; and
capturing a detailed view of the size, challenges and opportunities associated with both • Highlighting development/growth levers for FinTechs;
established and emerging sub-sectors within this space. The Nigeria FinTech Census report covers all of the key findings from the
This study culminated in the development of focused and insightful thought leadership research program, providing comprehensive insights into the sector.
Quantitative Qualitative Desk research

research research
► Alongside the qualitative

► 40 online surveys of ► 23 Interviews with
and quantitative
10 – 15 minutes Executives of FinTechs,
research, we reference
Conducted with major banks, investors
► publicly available
people currently and regulators by EY
research and the EY
working in the and FinTechNGR
FinTech Adoption Index
FinTech industry

The Nigerian
FinTech
Landscape
The Nigerian FinTech Landscape

The Nigerian FinTech Industry was in its infancy Capital… access to capital (both domestic and
stage a few years ago, but has matured to become a
►
international) has improved markedly since 2018.
What is FinTech?
major player in Africa. However, Nigeria is classified Despite the considerable increase in investment, Organisations combining
as a developing FinTech economy compared to its our research indicates that access to late stage innovative business models and
more mature global peers such as the UK, and growth capital remains a challenge for
Singapore, Australia, Sweden and India. It is Nigerian FinTechs. technology to enable, enhance,
estimated that Nigerian FinTech revenues will reach
► Demand… Demand is directly related to the and disrupt financial services
$543million by 2022, driven by increasing
success of FinTechs and we have seen an
smartphone penetration and the unbanked
increased adoption of Digital Financial Services EY Definition of FinTech
populations.
particularly with the Covid-19 Pandemic.
In 2019, Nigeria officially recognized its first FinTech
“
► Talent… the quality and volume of FinTech talent
unicorn, with Interswitch achieving a valuation of
in Nigeria is limited and insufficient. Attracting
$1billion based on a $200million investment from
and retaining talent remains the biggest challenge
VISA. Following shortly in 2020, Stripe, a US based
faced by FinTechs in Nigeria.
financial services company, agreed to buy Paystack The FinTech landscape is largely
in a $200m deal, just five years after Paystack was ► Policy and Regulation… Some progress has been misunderstood. Banks will not
founded. made to create a supportive environment for
FinTechs, however, there is a unique opportunity become technology companies, but
For this maiden edition of the Nigeria FinTech technology companies can provide
to improve the FinTech policy landscape and make
Census, we see an industry that has definition, is
gradually gaining international recognition, and
it a differentiator in Africa. financial services. This is what is
increasingly embraced by consumers and with With the COVID-19 pandemic and the impact it has driving the evolution
stronger collaboration between FinTechs and had on the Nigerian economy, it has created an
incumbents. opportunity for FinTechs to contribute to economic
growth. For this to happen, it is important that Nigerian FinTech
The strength of the Nigeria FinTech ecosystem is
entrepreneurs are able to scale-up, improve their
underpinned by individual and interconnected
value propositions and deliver on Nigeria’s FinTech
strengths across each of the key attributes
potential.
investigated throughout this report:
There are six broad FinTech segments supported by an ecosystem of enablers; Payments, Mobile Money and
Lending jointly constitute c.60% of the FinTech population
FinTech
Payments, Mobile Lending Savings, Investment & Enterprise Services & Cryptocurrency InsurTech
Segments
Money & Digital Banking Crowdfunding Infrastructure
Provide payments and Provide loans to consumers Provide solutions to help Provide enterprise software Provide access to digital Provide access to insurance
account solutions for and SMEs online. FinTech consumers save money. Also and solutions for the financial cryptocurrency markets and for consumers either directly
consumers and financial lenders assess borrowers’ help private and institutional sector. Includes tools for exchanges to enable users or through marketplaces.
Value institutions. Includes mobile credit worthiness and investors to buy, sell and managing accounts, finance pay or accept Also provide new
Proposition money and wallets, digital automate the underwriting manage assets and processes. Providers here cryptocurrency. technologies to enable
banks, payment processors, process. Some FinTechs in securities. FinTechs in this also provide core infrastruc- traditional insurers.
and payments back-end this segment further provide segment may also provide ture and platforms to enable
infrastructure providers. lending platforms. crowdfunding platforms. and enhance banks’ services.
% of
FinTechs 38%
38% 23%
23% 15%
15% 13%
13% 8%
8% 3%
3%
1. Digital payments 1. Retail lending 1. Digital wealth & asset 1. Financial services 1. Cryptocurrency 1. Digital insurers
2. Mobile money & wallets 2. SME lending management solutions exchanges & wallets 2. Insurance comparison
3. Payments processing & 3. Credit data analytics & 2. Automatic savings 2. Credit Infrastructure services
switching loan assessments platforms 3. APIs and Connectors 3. Digital agents and
Sub- 4. Digital banks & accounts 3. Alternative investments distribution platforms
categories 5. Global transfers & 4. International investment 4. Insurance system
remittances platforms providers
6. Terminal & 5. Crowdfunding
infrastructure providers
Venture Capital & Private Equity Associations & Facilitators Accelerators & Incubators Regulators
These organisations assist with seed- These are policy-making organisations

Enablers Venture Capital & Private Equity firms are Associations & Facilitators promoting
funding, business operating models and that enable the services of FinTechs by
Investors providing capital to startups at collaboration among FinTechs and the
workspaces, and link the startups to providing guidelines and enforcing these
various stages of growth. broader financial services industry.
investors and influencers. policies and guidelines.
Source: EY Analysis
The Nigerian FinTech market map covers a wide range of FinTechs across each NOT EXHAUSTIVE
category
Payments, Mobile Money & Digital Lending Savings, Investment & Crowdfunding InsurTech
Banking
Cryptocurrency Enterprise Services Venture Capital Associations & Accelerators &

& Infrastructure & Private Equity Facilitators Incubators
Key:
FinTechs
Regulators
Enablers
Nigeria FinTech Census 2020

Payments continue to be a major focus area for investors with demand driven by favorable policies
promoting financial inclusion, and growth in infrastructure supporting mobile payments
KEY TRENDS
Payments, Mobile
Payments, Mobile Money & Digital Banks
Money & Digital Banks
There is an increased investor
► Nigeria has become an increasingly cashless economy largely
focus on payments and digital
due to the regulatory drive for financial inclusion promoting banking
growth in digital payments (the volume of e-payment
Lending
transactions was 366 million in Q1 2020 up 57% from 232
million in Q1 2019 while the value of transactions stood at
₦31.2 trillion, up 28% from ₦24.2 trillion).
$200m
► Growth in this segment has been fueled by favorable fiscal PAYSTACK
Savings, policy supporting adoption of mobile payments, as well as
$200m
Investment & growth in mobile penetration (c.87% in 2020); ~400% growth
Crowdfunding
was recorded in mobile payments between May 2019 and May
2020.
INTERSWITCH
► Poor user experience on traditional products has been a driving
factor for FinTech adoption especially among younger digital
$170m
Enterprise
Services & savvy demographics.
Infrastructure
► Similarly, an unfavorable FX policy regime is promoting the
adoption of alternative cross border payments outside BRANCH
traditional banks.
Cryptocurrency
► There is an increased investor focus on payments and digital
banking; recent investments include Paystack ($200m),
$53m Series B
Interswitch ($200m), Branch ($170m), Flutterwave ($35m FLUTTERWAVE
Series B), Kuda ($10m), etc.
$10m
► The Payment Service Bank (PSB) regulation holds promise for
InsurTech
potential challengers and FinTechs, however stringent
regulatory requirements for issuance of this license have been
restrictive for smaller FinTechs. KUDA
Source: Techpoint, Techcabal, Mondaq, EY FinTech Insights
Digital lending remains a thriving FinTech sub-sector driven largely by retail lending; MSME segment
remains underserved
KEY TRENDS
Payments, Mobile
Lending
There is also an increased
► There is a rapidly growing base of FinTechs in Nigeria that offer
investor focus on lending; recent
digital loans (c.50); Instant unsecured loan offerings are gaining investments include
popularity.
Lending
► A large number of FinTechs are leveraging payments data to
create unique credit scoring models to enable retail lending.
Some examples include Carbon, Fairmoney, Aella Credit and
$170m
Branch. BRANCH
Savings,
Investment & ► Commercial banks are responding by developing strong digital
$10m
Crowdfunding retail lending propositions to compete with FinTechs (e.g.
GTBank QuickCredit, Access Bank’s QuickBucks and Sterling Debt
Bank’s Specta).
AELLA CREDIT
► There is also an increased investor focus on lending; recent
Enterprise
Services & investments include Branch ($170m), Aella Credit ($10m debt),
Infrastructure CredPal ($1.5m), Swipe ($150k).
► Global Standing Instruction (GSIs), a circular issued by the CBN
in 2020 offers lenders’ protection by providing lenders with the
ability to recover a borrower's debt from any or all accounts
$1.5m
maintained by that borrower across financial institutions CREDPAL
Cryptocurrency through a direct set-off from deposits/investments.
► Despite the significant contribution to GDP (~49%), the MSME
InsurTech
segment remains underserved. This is largely due to funding,
insufficient cashflows and infrastructure challenges. However,
offerings are increasing; examples are GroFin and Lydia who
$150k
provide business loans to finance SME growth needs SWIPE
Savings, investments and crowdfunding are growth opportunity areas for FinTechs, however recent
regulation expected to spur significant industry changes
KEY TRENDS
Payments, Mobile
Savings, Investment & Crowdfunding
• FinTechs in this space offer an attractive bouquet of products
Recent investments include
often with better interests and return on investments compared
to traditional banks. Examples include PiggyVest, Wealth.NG
Lending
SumoTrust, CowrieWise amongst others
• The provision of value added services and tools (such as
gamification) to help consumers achieve personal financial goals
and better manage their finances helps drive adoption, $15m
Savings, especially among younger digital-savvy demographics. COWRYWISE
Investment &
Crowdfunding • Provision of alternative investment classes helps differentiate
FinTechs in this category. Some FinTechs facilitate investment
in Agriculture (e.g. FarmCrowdy, Thrive Agric), Real Estate (e.g.
$150k
Rise Vest), and capital markets (e.g. Chaka)
Enterprise
Services & • Crowdfunding startups have grown in prominence, chiefly driven
by local agri-tech startups who are addressing agricultural
Infrastructure
BAMBOO
financing gaps by pooling funds from individual investors (e.g.
Thrive Agric)
• Recent SEC guidelines on Crowdfunding are expected to
decentralize the crowdfunding process by introducing
Cryptocurrency Crowdfunding Intermediaries (CFIs) who are required to
facilitate transactions, while also placing a cap on consumers’
investible assets. $140k Pre-seed
• Recent investments include Cowrywise ($15m), Bamboo RISE
InsurTech
($150k), Rise ($140k pre-seed), etc.

FinTechs are also providing solutions and infrastructure to help banks digitize and extend their services
KEY TRENDS
Payments, Mobile
Enterprise Services & Infrastructure
► FinTechs in this space are providing critical infrastructure to
Recent investments include
help banks digitize and extend their services. This includes API
providers who connect bank accounts to third-party applications
Lending
(e.g. Okra, OnePipe, Mono), credit infrastructure providers
(Migo, Pngme), and banking enterprise solution providers (e.g $1m
AppZone, FinTrak, Seamfix). OKRA
► FinTechs providing enterprise solutions have seen increased
commercial partnerships as commercial banks have sought to
$950k
Savings,
Investment & increase spend on technology. Solution offerings include Core
Crowdfunding
Banking Systems, Channels, Identity Management, Reporting
solutions, Enterprise Resource Planning, Card management, ONEPIPE
among others.
$500k
Enterprise ► Over the past 2 years, a growing crop of FinTechs have
Services & emerged to bridge infrastructure gaps by providing APIs to
Infrastructure
connect banks’ data to other services, as well as credit
Pre-seed
infrastructure for lenders. Despite being recently established, MONO
these FinTechs have garnered significant early stage attention
$500k Pre-seed
given the broad applications and use cases for their
infrastructure.
Cryptocurrency
► According to the Disrupt FinTech Funding report, more early
stage capital was provided to FinTechs in this category in 2020. PNGME
Recent investments include Okra ($1m), OnePipe ($950k),
InsurTech
Mono ($500k pre-seed), Pngme ($500k pre-seed), Evolve Credit
($325k pre-seed). $325k Pre-seed
EVOLVE CREDIT
Strong growth in local cryptocurrency adoption has evolved a new crop of Crypto-FinTechs, however recent
CBN circulars on cryptocurrency adversely impact short-term sustainability
KEY TRENDS
Payments, Mobile
Cryptocurrency
► Nigeria has witnessed growing cryptocurrency adoption, driven
by a predominantly young digital-savvy population, inflationary Recent investments include
local currency, stringent foreign exchange policies on both
Lending
inflows and outflows, and a high demand for remittances among
►
Nigeria’s diaspora.
Crypto user growth has increased significantly in Nigeria with
$15m
some peer-to-peer Bitcoin marketplaces reporting up to 140% BITFXT
Savings, growth in 2020. For instance, Paxful reported that Nigeria had
Investment & the world’s second largest Bitcoin trading volume, having traded
$1.5m
Crowdfunding
60,215 Bitcoins in the last five years, with over 20,500 coins in
2020 alone (c.$451 million USD). The Chainalysis’ 2020 Global
Crypto Adoption Index further ranks Nigeria at number 8 out of YELLOW CARD
154 countries in the use of cryptocurrency.
Enterprise
Services & ► Regulatory stance on cryptocurrency recently moved from
Infrastructure
cautious to antagonistic as the CBN prohibited local financial
institutions from dealing in cryptocurrencies and facilitating
payments for cryptocurrency exchanges. In response to these
restrictions, some exchanges have switched to peer-to-peer
$1.5m
trading, enabling them bypass institutional arrangements. XEND
Cryptocurrency
► Cryptocurrency platforms exist from both local players (e.g
Buycoins, Bitfxt, Bitsika, Xend) and international players (e.g.
InsurTech
Luno, Paxful, Cryptofully). Platforms may offer wallets,
exchanges, P2P marketplaces, crypto payment services or
infrastructure.
$450k
BUNDLE AFRICA
► Recent investments include Bitfxt ($15m), Yellow Card ($1.5m),
Source: Techpoint, Techcabal, Mondaq, EY FinTech Insights Xend ($1.5m), Bundle Africa ($450k).
InsurTech remains a nascent but emerging segment of the Nigerian FinTech industry
KEY TRENDS
Payments, Mobile
InsurTech
► Nigeria’s InsurTech segment is a relatively small but growing sub-
sector of the FinTech industry, with less than 15 FinTechs Recent investments include
estimated to be playing in this space.
Lending
► Initial
InsurTech solutions focused on improving access to
insurance by providing marketplaces for insurance (e.g. Compare
Insurance, Autogenius). These platforms provided improved
$10m
customer experience, and have since extended their offerings HELIUM HEALTH
Savings, towards providing more value added services to consumers. For
Investment & instance, Autogenius enables renewal and registration of vehicle
$37k
Crowdfunding
documents.
► With insurance uptake estimated at c.1.6% in 2019, subsequent
InsurTechs have focused on direct digital distribution, especially WELLAHEALTH
Enterprise for microinsurance targeted towards low-income individuals, in a
Services & bid to expand the base of insured Nigerians. Prominent examples
Infrastructure
include Casava, WellaHealth and Soso Care.
► Another crop of InsurTechs are focusing on providing critical
infrastructure to help insurers better serve customers. For
instance, Curacel provides intelligent claims management
Cryptocurrency infrastructure for insurers, Ark Insurance provides agent sales
solutions, while Helium Health provides HMO management
software.
► Further opportunities exist as NAICOM has outlined key
InsurTech initiatives towards achieving 40% insurance uptake, citing the
digitalisation of insurance as a key imperative.
► Recent investment includes Helium Health ($10m).
Change in relationship with incumbents in the past 12 months

Collaboration
The collaboration dynamics in the Nigerian FinTech Better 52%
industry has taken a significant turn for the better over
the past few years. There has been noteworthy
recognition by the incumbents on the need to collaborate
better, and to work more effectively for the benefit of the
38% 38% Same
Worse 3%
45%
consumer and the financial services industry as a whole.

We looked at the topic of ‘collaboration’ from both the In what way has this improved? (top 5)
FinTech perspective and the incumbent major Stronger Growth of our business
organisations in the industry. What we established is that relationships/collaboration Stronger relationships/
collaboration 38%
at an overall level, relationships have improved
tremendously and collaboration has gained positive Growth of our business 38%
momentum.
More access/engagement 19%
From the point of view of FinTechs who have interacted
with incumbents in the past year, the vast majority of Open to new ideas/
5%
19% 5%
FinTechs view the relationship as either better (52%) or innovation
unchanged (45%). Only 3% of FinTechs perceive that their Base: Organisations perceiving improvement with incumbents (21)
relationship with incumbents has worsened over the past
12 months. Top 5 issues with incumbents
Amongst those who considered an improvement in
the relationship with the incumbents, a variety of More access/engagement Open to new 61% Non-progressive or legacy mindsets
reasons are provided, most notably around: ideas/innovation
Unwillingness to take a risk with something
57%
“
new
Unwillingness to commit financially to
Amongst the few (9) who say that their relationship 50% a partnership
with banks has worsened in the past 12 months, the
Difficulty integrating into technology
biggest driver of this negative perception appears to Incumbents and FinTechs need to 46% platforms
be the traditional mindset of these incumbents and collaborate and communicate to understand
unwillingness to take risks with something new. each other, and achieve a common goal for 39% Lengthy procurement processes
the benefit of the financially excluded 18

- Nigerian FinTech

FinTech Industry Voice: Relationship with incumbents

What FinTechs say has improved What Incumbents are saying What the Regulators are saying
“
More meetings, face-time, more willingness
and openness to discussions and application of
“
CBN is here to encourage the inclusion of FinTechs
to upgrade the industry and not eliminate traditional
“
It is in the interest of FinTechs and the
regulators that there are appropriate
pilot solutions bankers guidelines
“
A greater amount of trust from banks, as the
industry continues to mature and grow, hence
“
FinTechs can motivate the incumbents to be more
aware, responsive to customer needs, and provide “
Evolution of the FinTech industry has happened
ahead of regulations
a more favorable view on the capability of customers with a variety of services
both emerging and matured FinTechs
“
General awareness, approval and adoption of
“
FinTechs will help in widening the variety of choices
that Nigerians have access to
“
Banks should partner with FinTechs that
already understand the market they intend to
play in, which in retrospect extends their
FinTech solutions have increased dramatically
“
reach thereby co – creating value
over the past 12 months
Real winners are the ones that play in spaces that
“ “
banks are not active in which leads to exponential
growth in business Regulators and FinTechs need to collaborate
Greater acceptance of less conventional
finance methods. Success elsewhere has and communicate to understand where both
decreased suspicion of new approaches and
technologies “
The reality is that FinTechs do better on technology
platform; speed to market; and innovation
parties are coming from
“
The banks and other financial institutions are
more concerned about disruption and “
If FinTechs bring value, there is every reason to
becoming more willing to collaborate partner with them
Drivers of
success

Drivers of success – Capital Sources of Capital for Nigerian FinTechs

Access to capital (both domestic and international) ► Growth in customer base is promising… 68% of USA 57%
remains essential to the growth and success of FinTechs have over 10,000 customers, with 80%
comprising of retail customers. This indicates high Nigeria 52%
FinTech businesses. Despite the considerable increase
in investment, our research indicates that access to adoption of FinTech by consumers, and provides signals UK&I 26%
late stage and growth capital remains a challenge for to investors on the market attractiveness of the
Nigerian FinTech landscape. Albania 13%
Nigerian FinTechs.
Singapore 9%
In 2019, the Nigeria FinTech sector attracted $122m
in investment, representing an annual increase of 28% Post-revenue FinTechs receive more funding South Africa 9%
in FinTech investment activity from 2018 at $95m. 37% France 4%
% of total FinTechs who have received
These investments accounted for 25% of Africa’s funding Andorra 4%
FinTech investment in 2019.
Afghanistan 4%
FinTechs in Nigeria have demonstrated a high reliance Pre-Revenue
on external funding. In Nigeria, three main 21% Mauritius 4%
Post-Revenue
observations can be made about FinTechs’ access to 16% Malaysia 4%
capital investments: 11% 11%
Austria 4%
► FinTechs are ‘investment-attractive’… Our 5% 5% 5% 5% 5%
analysis indicates that 86% of FinTechs arrive at the
Algeria 4%
0% 0% 0%
post-revenue funding stage within four years, on UAE 4%
average. Although the bulk of capital for the pre- $0 - $50K - $100K $500K $1m $5m - Above India 4%
revenue stage is usually privately funded, we $50K $100K -$500K - $1m -$5m $10m $10m
noticed, that 21% of the FinTechs at this stage Mexico 4%
receive funding of $50,000 at the minimum. Size of Market Segment Kenya 4%
► Support from international investors… FinTechs’ Brazil 4%
access to international funding is vast. FinTechs
report obtaining investment sources from 20 68% Netherlands 4%
countries across Africa, America, Asia and Europe.
57% of the FinTechs report the USA as a source of
Serve over 10,000 While Nigerian FinTechs have investors from a considerable
number of countries, the largest investments come from USA, UK
capital investments, higher than 52% who received customers and Albania.
locally-sourced funding.

Capital Most Recent Funding Round Investment Sources

Series D 3%
In evaluating the nature of capital inflows for FinTechs in Nigeria, 3% Venture Capital 59%
Series C
the following points are considered: Series B 14% Personal Investment 41%
Types of investment sources… We observed that most FinTechs Angel Investors 30%
leverage at least 2 sources of funding. While there are a sizable
Other 26%
number for self-funding founders of FinTechs (41%), most FinTechs Series A 24%
(73% of those who rely on external funding) leverage commercial Family and Friends 15%
sources to raise capital. Primary sources of such funding include Bank Loans 11%
venture capital, bank loans, grants; and other personal sources Angel 10%
Private grants 11%
such as family and friends.
Business Incubators 7%
Stages of startup funding… 24% of the startups surveyed have
developed a consistent customer base and have raised Series A Government grants and Subsidies 4%
Venture Capital funding as a result. This is followed by a 10% that
Other Early Funding 45%
have raised Angel investment, with 45% raising other early funding Do you consider an IPO to be a likely event for your
IPO Event Likelihood… Although only 3% of FinTech leaders company in the next 5 years?
indicated having made it to the Series D funding stage, 53% are
optimistic that their businesses will initiate an Initial Public Offering 5% Yes, within 2 years
(IPO) event in the near future. It is estimated that one in two 10%
“A FinTech with a good idea Yes
Yes, in 2 - 3 years
FinTechs plan for an IPO within the next three to five years.
that solves real problems, a
Average burn rate for more than half of the FinTechs surveyed good management team and No 47%
was greater than $50,000… 56% of FinTechs surveyed maintain an 53%
the required operating 38% Yes, in 3 - 5 years
average monthly burn rate of over $50,000. Meanwhile, 26% structures will attract capital
report burn rates below $10,000 monthly, and 19% between with ease”
$10,000 to $50,000. - Nigerian Investor

Capital
Required non-financial areas of support
While capital raising remains an active area of focus for
FinTechs in Nigeria, some findings indicate potential to Strategic International Access to Branding, Financial Operational Partnership Regulatory
improve: direction expansion new PR & expertise expertise opportunities compliance
and growth customers marketing expertise
► Available investor funds… Only about one-third (33%) of
Nigerian FinTechs report receiving over $10million in
HIGH
capital investments to date. Despite reporting high access
to external funding (73%), FinTechs report that access to
larger investment sizes are limited. Considering the
Level of importance
average burn rate for FinTech being relatively high, this
68%
signals a financial inadequacy to support operations. 66% 65%
► Burn rate management could be better for startups…
Analysis from the data suggests that more unprofitable 56% 55%
FinTechs have lower monthly burn rates compared to the 53%
50%
profitable FinTechs. It is implied that the profitable 48%
FinTechs with higher burn rates have access to more
funds. Of the FinTechs that reported receiving between
$1m and ‘above $10m’ in capital funding, an estimated
25% were not profitable in the preceding year. However,
48% of the leaders who recounted an average monthly
burn rate of over $50,000 were profitable nonetheless. LOW
Note: Level of importance calculated as weighted average of all response contributions for each non-financial area assessed.
Looking forward:
► FinTechs require more from investors than financial Burn rates in relativity to profitability
support … Startup FinTechs may require support in non-
financial areas that boost annual revenue generation and $0 -$10,000 26% 30%
optimize operations. We noticed more (68%) of the Unprofitable in
FinTechs indicated requiring support in areas such as previous year
obtaining more partnership opportunities and access to $10,000 -$50,000 19%
new customers (65%), 66% require support with
international expansion and growth, and 56% in branding
48%
and marketing. Only 33% Over $50,000 56% Profitable in
Receive funds of over $10m previous year

Global FinTech Adoption

Demand China Mainland 87%
In Nigeria, demand for FinTech services is largely driven by banking platforms to serve the banked and unbanked India 87%
financial literacy, a youthful, digitally savvy population and population
increasing smartphone penetration which stood at 50% (100 Russia 82%
► Payment service banking (PSB)… The licensing of Payment
million unique subscribers) at the end of 2019. While FinTech South Africa 82%
Service Banks by the regulator has seen some FinTechs use
emergence is relatively new compared to other developed
this platform to facilitate low-value transactions in micro- Colombia 76%
economies, we have seen a swift adoption of FinTech services
savings and payment services through secure technology
particularly with the emergence of Covid-19, which increased Peru 75%
platforms.
the demand for technology enabled financial products and Netherlands 73%
services. Despite these adoption levers and increase in digital activity, a
considerable portion of the population remains financially Mexico 72%
FinTechs in Nigeria are largely seen as the major drivers of

excluded, giving expansionary room for more FinTech Ireland 71% Average
financial inclusion, with the percentage of financially-excluded
adults in Nigeria reducing from 41.6 per cent in 2016 to 36.8
infiltration In the retail space.
UK 71% Global
per cent in 2018. Some factors buttressing the adoption of Corporate customers also make up a sizeable portion of
FinTech services include: Nigerian FinTechs’ customer base, and demand among this class
Argentina 67%
Fintech
of consumers has been largely driven by:
Adoption
Hong Kong 67%
► Faceless onboarding processes.…Nigerian consumers are
Singapore 67%
moving towards seamless digital transactions, with minimal Corporate mandate to educing the spend on technology…
64%
►
verification bottlenecks The incumbent FIs are gradually collaborating with FinTechs South Korea 67%
for corporate solutions instead of building proprietary Chile 66%

► Personal finance management… The customer landscape is
applications. However, many other FIs have adopted the Brazil 64%
starting to focus on management of personal finance and
strategy of developing their own ‘FinTech-like’ propositions Germany 64%
micro-investing opportunities
that are competing directly with existing FinTech offerings. Sweden 64%
► Backward Integration… FinTechs are increasingly Switzerland 64%

Lastly, the Nigerian Government can also facilitate FinTech
consolidating products and service as they seek to provide Australia 58%
demand by consuming FinTech products and services, as well as
services across the FinTech value chain. Some FinTechs are Spain 56%
promoting FinTech offerings among its corporate suppliers.
acquiring Microfinance Banks enabling them to provide Italy 51%
While Government has provided some support in the creation of
expanded services such as micro-savings, micro-credits, and Canada 50%
innovation hubs around the country, access to government
other financial products USA 46%
support by FinTech’s is relatively limited compared to Kenya Belgium and 42%
► Agency banking and mobile money solutions… The industry and South Africa. Luxembourg
France 35%
has seen an increased focus in FinTechs using the agency
Japan 34%
Source: EY Global FinTech Adoption Index 2019

Talent Critical Important Neutral Not Required Unimportant

Attracting and retaining talent stands out as the biggest recruit talent in a wider talent pool and in a more
challenge faced by FinTechs in Nigeria. For many cost-effective manner.
FinTechs, the pandemic has resulted in tightened Software engineering
FinTechs leverage part-time and international talent…
budgets and a freeze on hiring. Despite these
About 70% of FinTechs report using part-time IT support and system
challenges, there’s potential for FinTechs to re-evaluate
employees, with 53% of this group reporting using maintenance
their hiring strategies. As the transition to remote
between 1 – 10 employees. 48% of FinTechs further
working is likely to become more prevalent, this
leverage international employees reflecting thinner Digital marketing and sales
provides opportunities to hire from a wider talent pool
barriers for technology talent.
(local and international). It is also an opportunity to
reduce employee costs. When we looked at the profile of people working in the Data analytics
FinTech industry, the following insights were drawn:
Three major findings were observed on talent retention
for FinTechs in Nigeria: ► A characteristic measure of the Barriers to Entry Cyber and IT security
for new entrants… The Nigerian landscape shows an
► Advanced digital skills are essential for success… Basic knowledge of digital
upward trend in entrepreneurial activity in the
77% of FinTech leaders point to data analytics as technologies
FinTech sector. The leaders’ professional profiles
“critical” to strategy and operations, compared to
indicate that 37% of Nigerian FinTech leaders have
other digital skills. Insights from FinTechs interviewed
just less than 5 years experience before starting up a
also highlight CFO’s and Administrative talent as
FinTech. This trend is reflective of the ease of entry
“very important” but scarce skills necessary for the
overall success of FinTechs.
into the Nigerian FinTech industry. 16%
55% of
► Diversity challenges in FinTech... The gender of FinTechs
► Talent pool is mostly local… Despite the rise in digital
imbalance in the STEM space (32% female and 68% FinTechs have all-
skills acquisition across the globe, most of the
male) in Nigeria is connected more broadly to Only 40% have all- female
FinTech players use in-country talent to execute their
diversity challenges within FinTech. Only 35% of currently employ over male founders
strategy, albeit with some support from international 250 full-time employees founders
FinTechs, report having at least one female founder.
resources. It is estimated that one in two FinTechs
Female representation in FinTech continues to be
currently employs at least one international talent.
out of kilter with the wider population, particularly at
► Remote working could redefine the talent senior levels; Over 50% of the FinTechs under review Over 10 years 29%
landscape,.. The COVID-19 pandemic has prompted have only male founders, while 16% of the FinTechs Between 5 to 10
businesses to relook their business models, where surveyed have all-female founders. It is estimated 26%
years
remote working could become the norm. As the that this will improve over the next 5 years, Between 2 to 5 years 37%
physical location of talent becomes less important, considering the growing involvement of female
this could present an opportunity for FinTechs to talent in technology. 2 years or less 9%

Talent
Skills Shortage Rarest Skill Areas
Challenges encountered by Nigerian FinTech organisations are explored
below: Data Analytics / Science 62%
► The main issue… 35% of respondents say attracting qualified or Cybersecurity 50%
suitable talent tops the list of challenges facing FinTechs in Nigeria.
This gap may continue to widen, as more talents emigrate or work in
YES Software Engineering 50%
other markets. 46% Systems Architecture & Development 50%
► Finding essential skill sets… Leaders suggest that the skill areas which
are the toughest to acquire are mostly technology capabilities including Regulatory & Risk Management 23%
Data and Analytics, Cybersecurity, Software Engineering and Systems
Architecture & Development, however, skills such as Business Process Design & Optimisation 15%
Management, Marketing and Communication are becoming more Product / User Experience & Design 19%
essential.
Tackling skills shortage… 46% of respondents admit to a growing Account Management 12%
77%
►
shortage of skillsets in the required areas. However, 77% of them are
Financial & Tax 12%
actively looking at ways to mitigate the skill dearth within their
organizations, through partnerships with other SMEs, suppliers / Talent Management 8%
contractors, constant re-training to upskill current workforce, and
collaboration with academia to develop modern and relevant digital General / Project Management 4%
FinTechs are engaging in talent & skill
course content including off-taking standout candidates from this accelerator programs Sales & Marketing 4%
process.
Attracting qualified / suitable talent remains the top issue for FinTechs in Nigeria
35% 31% 31% 27% 23% 23% 19% 15% 12% 12%
Attracting qualified / Regulatory outlook Competition Unfavourable Partnerships with Consumer Cybersecurity Customer adoption Debt Funding Issues Fraud
suitable talent regulations incubents confidence

Regulatory timeline:
Policy & Regulation Positive policy developments
Policy and regulation stands out as a major 2015 Guidelines on Mobile Money Services
hurdle for FinTechs in Nigeria relative to other Some notable policies recently released by
FinTech markets. Our survey and interviews regulators include: The Circular on the Regulatory
Framework for the Use of
indicate that some progress has been made to APR 2018
Unstructured Supplementary
create a supportive environment for FinTechs Tiering of payment licenses: CBN Service Data (USSD)
(regulatory sand-boxes, new license Introduced 3 license categories to guide Cybersecurity Framework and
requirements, etc.), however, there is a unique the setup of FinTechs, enable oversight of JUNE 2018 Guidelines for Deposit Money Banks
opportunity to improve the FinTech policy their operations and protect consumers and Payment Service Providers
landscape and make it a differentiator in Africa. CBN Licensing Regime (License

Payment Service Banks: Setup to JUNE 2018 Tiering For Payment System
As the FinTech environment advances and the advance the financial inclusion goals, Providers)
complexity of disruptive technology intensifies PSBs provides the structure for mobile
(blockchain, artificial intelligence, digital Inauguration of The FinTech
network operators, mobile money NOV 2018 Roadmap Implementation
banking), the strength and maturity of Nigeria’s operators, and banking agents to offer Committee of SEC Nigeria
policy and regulatory environment will be critical banking services. CBN approved 3 new
to protecting the nation’s financial system as well PSBs in 2020 New Licence Categorisation for
DEC 2018
as consumers, while creating an enabling Nigerian Payments Service
Providers
environment for FinTechs to thrive. Regulatory Sandbox: CBN has deployed a
controlled testing environment for Implementation of the CBN cashless
Regulatory bodies in Nigeria have begun to JUN 2020
innovative FinTechs to test ideas and policy
position reassuring outlooks with their policy
business models
directions and open lines of communication, in a
Guidelines for licensing and
bid to supportively regulate Fintech operations in Open Banking Regulation: The Apex Bank AUG 2020
regulation of payment service banks
Nigeria. has released regulations for open banking
Enabling organizations such as the FinTech framework in Nigeria. Nigerian FinTechs
Issuance of the Framework for
are poised to take advantages of the JAN 2021
Association of Nigeria have worked strategically Regulatory Sandbox Operations
to synergize FinTechs collaborations, as well as resultant opportunities as Nigeria
creating a coalescing voice between FinTechs, becomes the pioneer of open banking in FEB 2021
Issuance of Regulatory Framework
Africa for Open Banking in Nigeria
incumbents and regulators in the industry.

Policy & Regulation

What are the most challenging considerations
Regulatory
Function
Role in the FinTech
FinTech Segments for your business in the current regulatory
Body Industry
environment? (%)
The CBN is the principal regulator mandated to
issue licenses to banks and other FIs by virtue of Administering operating Banks, All FinTech
CBN
the Banks and Other Financial Institutions Act, licenses to FinTechs Segments
2020 (“BOFIA”). Remaining compliant as 18%
business grows / transforms
To develop and regulate a capital market that is Deploying innovative
FinTechs playing in the
SEC dynamic, fair, transparent and efficient, to products or processes in the
Capital Market Ensuring sufficient capital
contribute to the nation’s economic development Nigerian Capital Market and liquidity
14%
Protects depositors and guarantees the Identifies, develops and

settlement of insured funds when a deposit-taking promotes technology Ensuring high standards of conduct and
Deposit-receiving 13%
NDIC financial institution can no longer repay its solutions that will protect good customer outcomes
FinTechs
deposits, thereby helping to maintain financial depositors with Insured
system stability Financial Institutions
Ensuring strong risk framework
13%
and controls
Evaluation/Registration of technology transfer
agreements; promotion of intellectual property; Issues permits for the FinTechs with foreign
NOTAP
oversight over R&D commercialization, activities, transfer of technology shareholders Managing high-frequency
13%
regulatory changes
and industry linkage
Regulates FinTech services Eliminating financial crime

12%
leveraging mobile phones (incl. AML / fraud)
Responsible for the economic and technical pursuant to the License Mobile Money Operators
NCC
regulation of the communications industry Framework for Value Added
Maintaining high standard
Service (VAS) issued by the of cyber security
11%
NCC
To operate and implement the National IT policy Suitable resourcing for risk
Regulates the use of policies and compliance functions
5%
and to give effect to provisions of the National
NITDA such as Data Privacy and All FinTechs
Information Technology Development Agency Act
protection across the nation
(NITDA Act) of 2007

Policy & Regulation (cont’d)

Regulatory Role in the FinTech
Function FinTech Segments
Body Industry
Overseeing the ministration, supervision,
regulation and control of insurance business in Oversight of the activities of
NAICOM Nigeria and protection of insurance policyholders, InsurTechs that overlap with InsurTech
beneficiaries and third parties to insurance the mandate of NAICOM
“
contracts.
National agency responsible for the receipt of
disclosures from reporting organisations, the Monitoring money laundering
NFIU analysis of these disclosures and the production of and terrorist financing risks All Fintechs
intelligence for dissemination to competent
authorities.
within the ecosystem Innovation and regulation needs to
Regulates matters of national identity in Nigeria
Mobile Money and Digital
be merged and balanced in such a
NIMC
with services covering National Identification Identity verification and
Number (NIN) enrolment and issuance, National e- authentication, KYC
Banking, Lending, way that the end users benefit
Wealth management and
ID card issuance, identity verification as well as
data harmonization and authentication
processes
Investech from it
- Nigerian Regulator
Regulated by the Securities and Exchange
Commission (SEC) of Nigeria. The Exchange offers
FinTechs seeking listing
NSE listing and trading services, licensing services, Provides access to capital
on the capital market
market data solutions, ancillary technology
services and more
Provides infrastructure for
Deliver payment/settlement services to financial the automated processing
FinTechs leveraging
NIBSS institutions, mitigate operational and credit risks and settlement of
Inter-Bank Transactions
in funds transfer across financial institutions transactions between
financial institutions
Providing support to super
Deepen Financial Inclusion in Nigeria through a
agents, banks and other
robust ecosystem with strong regulatory Mobile Money and
SANEF stakeholders to acquire
oversight, consumer protection and interoperable Digital Banking, Lending
agents in the 6 geo-political
system.
zones

Policy & Regulation

The impact of the relationship between regulators and FinTechs. The regulatory bodies in response have Key stakeholders have explored various options to
stakeholders in the industry is pivotal to the success of created channels of discussions to better engage and develop holistic strategies in addressing these
financial services in Nigeria. It is critical for key register buy-ins of all parties. difficulties. While foundational work has begun in this
challenges to be resolved as they emerge. area, it is clear that there is a need for greater
• Regulator participation: Some FinTechs believe that
collaboration between regulators, incumbents and
Insights from the interviews and surveyed FinTechs Industry platform providers/self regulators such as
FinTechs for existential synergy.
show that the major challenges faced in the industry are NIBSS are allowed to compete unhindered within the
broadly around four areas: ecosystem, thereby undermining or limiting the field Notable steps in this regard include ongoing efforts by
of play for FinTech organisations the apex bank to release a number of exposure drafts
• Rate of change of regulations: Respondents
designed to attract industry participation. Examples
mentioned that while regulation continues to • Transparency : While regulators continue to open
include, releasing a framework with sandbox to enable
progress, the pace at which these changes occur lines of communication and issue exposure drafts to
FinTechs test their business models without the
currently limits available growth potential and enable industry participation, FinTechs remain
significant investments in licenses.
strategic planning cautious. For example, the CBN “regulatory sandbox”
requires disclosure to the regulator for approval in an While FinTechs try to navigate the dynamic business and
• Flexibility of capitalization costs: FinTechs expressed
industry where ideas are seen as competitive regulatory terrain in Nigeria, the regulatory bodies have
concerns about the historic rigidity of regulations,
advantages begun to provide guidance and guidelines required for
especially around the capitalization requirements for
success.
Survey Snapshot:
24% of surveyed FinTechs consider regulatory Compliance with regulation was identified as the most
outlook / landscape and the unfavorable regulatory challenging policy area in the current business environment
environment to be amongst the top challenges they (at 18%) while the subject of insufficient capital and
face as business. liquidity, a fiduciary requirement for a larger percentage of
FinTechs stood at 14%

Future focus

Future focus –Outlook and Optimism

Based on our analysis of challenges and informal support, could help scaling FinTechs
opportunities, as well as learnings from international navigate regulatory changes, build resilience and
ecosystems, we propose the following set of themes embed best-in-class practices to support sustainable
and considerations to propel the next stage of growth
Nigeria FinTech development. These considerations
We can make Nigeria a destination of choice for
63%
have not undergone an impact or business case
overseas FinTechs and support Nigeria FinTechs in
assessment and should be taken as a basis for
accessing overseas demand, talent and capital…
further analysis.
Survey respondents credit Nigeria as a fast growing
Increased collaboration with incumbents and
FinTech economy but agree that more needs to be
FinTechs… When compared to 12 months ago,
done to deliver tangible outcomes, particularly for
FinTechs are experiencing better access to and more
Nigerian FinTechs in the scale-up phase
collaborative relationships with incumbents. This will
continue in the near future. Exploration of the African Market … A majority of
surveyed FinTechs believe Nigerian FinTechs will be
Newer business models by Incumbents: As much as
able to compete internationally (63%). This belief is
incumbents partner and collaborate with existing
particularly evident amongst FinTechs who have
FinTechs, some incumbents are adopting various
models to entering the market themselves. Some
experience venturing to other markets
…believe Nigerian
banks have spun-off FinTech entities while others are Increasingly diverse industry- Progressing towards a
opting to digitize their operations to compete. more diverse and inclusive industry… The positive
trend in female participation within and at the helm
FinTechs will be able
to compete
Regulatory support will improve… We suggest that
of the FinTech startups heralds a promising outlook
regulators provide a bit more dedication and focus to
for gender equality within the industry
supporting the FinTech players. For example, the
CBN may consider how regulatory support can be
extended beyond the regulatory sandbox. A
internationally
regulatory ‘scale-box’ concept, including formal and

Future focus –Talent

Looking Forward: Fintech Strategies
FinTechs will have improved access to the world-class talent that they need to set up and scale.…
The market for FinTech talent is competitive. Talent policy must be shaped to deliberately develop
local talent (through educational policy shifts) and strengthen its access to domestic and international
talent. This will improve access to talent as well as increase confidence in the local talent pool.
“
Regulation: Proactive disposition to
regulation, anticipate and prepare for
different scenarios
To attract and retain talent, FinTechs need

to have a good brand and undertake projects Build strategic partnerships with licensed
incumbents and regulators
that will make the lives of their talents
better
- Nigerian FinTech
Some initiatives which the FinTechs say can transform the FinTech talent landscape include: Set up training programs, offer internships to
fresh graduates and young talent
• Development of a national skills and talent strategy to increase and diversify the supply of talent
within financial services and FinTech
• Working with education policymakers and providers to consider how school curricula can best
support young people to develop sought-after STEM capabilities and create a ‘digitally minded’ Drive adoption through responsive customer
pipeline of talent. centric strategies
• Collaborate with universities and schools to increase awareness of FinTech and financial services
innovation, and consider the use of channels such as apprenticeships and work placements to
attract talent to the sector.
Deploy strategies to reduce of the customer
• Consider the diversity of the talent pipeline, noting that diversity gaps may originate as early as the
acquisition costs
schooling system. Employers also play a key role in attracting and retaining a diverse workforce.
Based on results from surveyed FinTechs (40); EY Report - UK FinTech Report, 2020

Future focus –Growth and Expansion

Top 8 international operation areas for Nigerian FinTechs
As the Nigerian FinTech industry continues to grow, there is enormous potential for the
industry to mature into a compelling force within the African FinTech landscape, as well
as become a significant player on the global stage.
“
As FinTechs, we see massive
opportunities for technology to unlock
enormous economic value in Nigeria
- Nigerian FinTech
The COVID-19 pandemic has also presented unique opportunities for FinTechs to
accelerate innovation and transformation across financial services and beyond, with
emergent cross-boarder considerations such as:
► Increasing digital adoption due to heightened physical restrictions
► Potential changes to work habits with remote working as the new norm
► Opportunity for collaborative partnership between FinTechs and incumbents to deliver
enhanced digital value to customers
“
Reflecting on highlights from the 2020 census data, a number of FinTechs surveyed
remain optimistic about opportunities to venture into other markets. While a growing We expect newer business models by Incumbents to
number of FinTechs already have their headquarters in overseas jurisdictions, many compete against FinTech propositions but also anticipate
FinTechs having already established presence in major African countries. The outlook increased collaboration
therefore remains optimistic for the Nigerian FinTech industry. - Adedapo Adewole, Technology Partner, EY West Africa 34

FinTech Survey Respondents

Stakeholders consulted Cryptocurrency Payment/Mobile
► Belfrics Money/Digital Banking
Industry Interviews ► Binance ► Ativo
FinTech Interviews
► Bitpesa ► Brinq Africa
► Buycoins ► Cellulant
Payments & Digital Banking Regulators ► Jelurida ► Eyowo
Interswitch Chief Executive Officer Securities & Exchange Head Market Infrastructure & ► Luno ► Fets Ltd
Commission Innovation Department ► Flutterwave
Flutterwave Cofounder/Chief Executive Officer Enterprise Services ► Global Accelerex
Central Bank of Nigeria Director Payment Systems
Paystack Cofounder/Chief Executive Officer ► Appzone Limited
Management Department
► Chams ► Innovate1Pay
Kuda Bank Founder/Chief Executive Officer National Information Director General ► Inlaks ► Interswitch
System Specs MD/Chief Executive Officer Technology ► Qrios ► Kuda Bank
Executive Director Development Agency ► Smarteller ► Netplusdotcom
► Paystack
Investors
Investment/Savings/Wea ► Systemspecs
Lending Lagos Angel Network Cofounder
lthtech ► VoguePay
Fairmoney General Manager
TLcom Senior Partner ► Bankly
Carbon Head of Product ► Cowrywise
Flourish Venture Partner
Branch Operations Director ► EGM
Head Legal and Compliance Accion Venture Lab Senior Investment officer ► Esusu Africa
► Piggyvest
FastCredit Chief Executive Officer ► Riby
BFA Global Country Manager
Enterprise Services Incumbents Lending
Appzone Chief Executive Officer First Bank Group Executive eBusiness & ► Aella Credit
TeamApt Founder/Chief Executive Officer Retail Products ► Branch
► C24ng
GTBank ED Digital Banking
► Fairmoney
Cryptocurrency Access Bank ED Operations & IT ► Fast Credit
Buycoins Product Manager ► Lidya
Providus Bank Chief Financial Officer ► Migo
Enablers ► Page
NIBSS MD/Chief Executive Officer ► BeeLend

Contact us
EY FinTechNGR
Dr. Segun Aina Ade Bajomo

Adedapo Adewole Olayinka Egbedeyi Chairman, Board of Trustees President
Partner, Consulting Manager, Consulting
Fintech Association of Nigeria Fintech Association of Nigeria
EY Nigeria EY Nigeria
[email protected] [email protected]
[email protected] [email protected]
om
Dr. Babatunde Obrimah Seun Folorunso

Timothy Ayo-Ajayi
Claire Opia Chief Operating Officer Resource Manager
Senior Associate, Consulting
Associate, Consulting Fintech Association of Nigeria Fintech Association of Nigeria
EY Nigeria
[email protected] EY Nigeria babatunde.obrimah@Fintechng. [email protected]
[email protected] org

Nigeria Fintech Census 2020: Profiling and Defining

Uploaded by

Copyright:

Available Formats

Nigeria Fintech Census 2020: Profiling and Defining

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Nigeria Fintech Census 2020: Profiling and Defining

Uploaded by

Copyright:

Available Formats

NIGERIA FINTECH CENSUS 2020

PROFILING AND DEFINING THE FINTECH SECTOR

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 2

Fast facts – The Nigerian FinTech Landscape in 2020

End customer profile liquidity

Both Company stage Relationship with incumbents (past 12 months)

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 3

Female participation in the FinTech workforce Profitability of FinTechs (post-revenue)

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 4

Ade Bajomo Dapo Adewole

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 5

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 6

About the Research

Quantitative Qualitative Desk research

► Alongside the qualitative

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 7

The Nigerian FinTech Landscape

These organisations assist with seed- These are policy-making organisations

Cryptocurrency Enterprise Services Venture Capital Associations & Accelerators &

Nigeria FinTech Census 2020

Source: Techpoint, Techcabal, Mondaq, EY FinTech Insights

Change in relationship with incumbents in the past 12 months

consumer and the financial services industry as a whole.

the benefit of the financially excluded 18

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 18

FinTech Industry Voice: Relationship with incumbents

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 20

Drivers of success – Capital Sources of Capital for Nigerian FinTechs

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 21

Capital Most Recent Funding Round Investment Sources

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 22

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 23

Global FinTech Adoption

FinTechs in Nigeria are largely seen as the major drivers of

for corporate solutions instead of building proprietary Chile 66%

► Backward Integration… FinTechs are increasingly Switzerland 64%

Source: EY Global FinTech Adoption Index 2019

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 24

Talent Critical Important Neutral Not Required Unimportant

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 25

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 26

landscape and make it a differentiator in Africa. CBN Licensing Regime (License

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 27

Policy & Regulation

Protects depositors and guarantees the Identifies, develops and

Regulates FinTech services Eliminating financial crime

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 28

Policy & Regulation (cont’d)

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 29

Policy & Regulation

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 30

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 31

Future focus –Outlook and Optimism

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 32

Future focus –Talent

To attract and retain talent, FinTechs need

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 33

Future focus –Growth and Expansion

BASED ON RESULTS FROM SURVEYED FINTECHS (40) | 34