Experts provide insight into Fintech growth, operations

Industry leaders have provided insight into financial technology (Fintech) growth and operations in the country.

They made the insight during the virtual couch session at the recently concluded Lagos Startup Week. Hosted via Twitter Spaces by the Nigeria Country Manager of Stitch, Benjamin Dada and Managing Director, Branch Nigeria, Dayo Ademola, who joined other fintech industry leaders to discuss the topic “What next for Fintechs in Africa”?

Ademola said access to financial services has been a sign of development in underdeveloped nations as we discuss the importance of financial services in society.

Managing Director of Klump, Celestine Omim stated that the rise of fintech has been encouraged by the expansion of mobile phone usage and the Central Bank of Nigeria’s cashless policy.

Vesti co-founder Olusola Amusan added that the lack of access to financial solutions faced by many of the Nigerian population provided the opportunity for fintech growth.

Startup Program Manager at Paystack, Nubi Kay agreed that fintech is the backbone of commerce, confirming that 60 to 70 percent of funding for tech startups 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 had earlier argued that the growth can be attributed to huge gaps that needed to be filled in terms 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, adding that “yet 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 customers who do not default.”

Explaining how Branch has solved this problem, Ademola said “at Branch we have built a very good model that is getting better daily to score people.

“Since we don’t have an available nationwide credit score that can 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.