Nigeria's Fintech Landscape in 2022 by Richie Santosdiaz for The Fintech Times
Fintech Middle East & Africa Women in Tech

Growing Trust is Key for Fintech to Succeed in Nigeria

In 2020, for Nigeria’s 200 million people, there were about 300 fintech companies. Mobile network operators and banks are also reeling out fintech products in a bid to drive financial inclusion across the country. The sector has also sustained investor interest- it raised $439 million in 2020 alone. However, more than half of Nigeria’s adult population were still unbanked, and cash payments are still wildly popular across the country, even for online transactions. Nigeria’s fintech has massive potential but it needs trust to grow its user base and deepen its relationship with existing users.

Kenny Orisanaiye is the Founder and CEO of HollaTags Limited, a technology platform founded in 2014 that facilitates communication for businesses looking to connect with their audience on mobile. Here he shares his thoughts on how trust is key for fintech to succeed in Nigeria.

Kenny Orisanaiye is the Founder and CEO of HollaTags Limited,
Kenny Orisanaiye, Founder and CEO, HollaTags Limited,

Fintech drives financial inclusion, enables other technology sectors, and boosts efficiency in commerce as a whole, ultimately contributing to economic growth in the country. As digital transactions increase, fintech has the potential to continue growing- thanks to rising internet usage, smartphone penetration, and the country’s swelling young and entrepreneurial population. 

To succeed in their role as challengers to traditional banks, last-mile facilitators for financial inclusion, and enablers for digital commerce across sectors, there is a need for fintech to grow trust among consumers. Fintech companies are generally acknowledged to do better with innovation and the speed with which they offer new products to the market, because of their size and nimble nature. But according to McKinsey, “Despite the dissatisfaction among consumers with traditional banking services and the rise in fintech products to address these pain points, the switch to fintech is not an automatic step for many. The majority of banked customers, 67 per cent, still say that they trust their bank more than fintech.” 

Enhancing Financial Innovation & Access (EFInA), a financial sector development agency, lists ‘trust’ as one of the three key obstacles affecting the uptake of mobile financial services in Nigeria, along with ‘access’ and ‘low awareness.’  Although there is distrust for formal financial services in low-income and rural communities who generally prefer rotating savings and credit societies, fintech’s typical lack of physical touchpoints worsens the skepticism.

Agent banking has proven useful to create physical touchpoints for digital financial services, allowing users to interact with human agents. Agents, who are often members of these communities, inspire some confidence compared to services that require users to entrust their funds to a digital system with no human touchpoint. Nevertheless, the eventual goal of digital finance is to reduce reliance on human agents and help people access financial services more conveniently through their mobile devices. Reducing reliance on agents cuts the cost of advancing financial inclusion, and accelerates universal access to quality financial services. 

Gaining trust requires widespread positive sentiments with regard to digital financial services. First, combating fraud is a key factor. Customers, particularly digital novices, are often concerned about being fraudulently deprived of their funds without a physical location for recourse. Between January and September 2020, Nigeria lost over 5 billion naira to fraud, with most of these happening via digital channels. Fintech services, therefore, have to take extra measures to secure customer funds to reinforce positive sentiment. Persistent user education, intelligent and intensive monitoring systems, shorter log-in sessions, and dynamic passwords are examples of steps that fintech services put in place to check fraud and boost trust. For example, passwords are central to fraud prevention, and dynamic passwords add an extra layer of protection for users. Delivering them securely to customers is key to digital fraud prevention. When properly integrated, dynamic passwords sent via SMS, Whatsapp, RCS, and other instant messaging channels often create a solid layer of security for customers.

Fintech scepticism

Scepticism for fintech products in Nigeria, due to their relative novelty and lack of legacy standing, means that customers have higher expectations of them in relation to traditional banks. Customers expect seamless service without hiccups. Fintech solutions must deliver on promises and exceed expectations, encouraging users to recommend these products based on their good experience. People often trust products referred to them by people they know. A McKinsey customer survey in Nigeria showed that 55% of customers first heard about a fintech product through a friend. 

In the final analysis, as long as a large section of the Nigerian population remains underserved financially with little or no access to loans, savings solutions, insurance, and digital payments amongst other things, fintech’s potential remains massive. Growing trust is however important to tackle the behavioural norms that tie the unbanked and underbanked to legacy providers and informal financial practices. 


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