Conversations on fintech growth and operations in Nigeria

During the Virtual Couch Session at the recently concluded Lagos Startup Week, industry leaders decided that access to financial services is a sign of development in Nigeria.

Hosted via Twitter Spaces by Benjamin Dada, the Nigerian Country Manager of Stitch, Dayo Ademola, Managing Director, Branch Nigeria, joined other leaders in the fintech industry to discuss the theme “What next for Fintechs in Africa?”

Access to financial services has been a sign of development in underdeveloped nations, Ademola said, while discussing the importance of financial services in society. Celestine Omim, CEO of Klump, agreed, adding that the rise of fintech has been encouraged by the expansion of mobile phone usage and the Central Bank of Nigeria’s cashless policy.

On his part, Olusola Amusan, co-founder, Vesti, pointed out that the lack of access to financial institutions faced by many of the Nigerian population provided the opportunity for fintech growth.

Nubi Kay, Head of Startup Program at Paystack, agreed that fintech is the backbone of commerce, confirming that between 60 and 70 percent of tech startup funding goes to the fintech space, which has made up the bulk of high-value startups and unicorns in Nigeria.

Speaking about the rise of the fintech space, Ademola said the growth can be attributed to huge gaps that need to be filled, such as credit provision and the ability to provide 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.

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Nevertheless, this opportunity has also seen its share of challenges. Underwriting and scoring are the main problems with lending in the Nigerian system, whether small retail loans or larger individual and commercial loans. Basically, how do lenders determine who is worthy and what models can identify non-defaulting customers.

Branch has solved this problem, Ademola said, explaining: “At Branch, we’ve built a very good model that’s getting better every day to score people. Since we don’t have an available nationwide credit score to inform your lending decision, we have to rely on alternative data points. We’ve spent a lot of time fine-tuning the model so we can make small loans available to people because it’s almost impossible to get a loan anywhere else. We’re also good at predicting when people will pay us back.”

Since its inception, Branch International has issued over N6 million in loans to Nigerians while offering investment opportunities at their fingertips. The digital finance app offers services such as small loans of up to N500,000 ($1,200) and long and short term investment opportunities with one of the highest ROIs in Nigeria.