The Chairman of Fidelity Bank, Mustafa Chike-Obi, has said that the rise of fintech companies in Nigeria is not in any way a threat to the traditional banks in Nigeria.
According to him, the traditional banks are also making use of financial technology, thus they are able to render the same services being rendered by the fintech companies.
Speaking on a TV programme monitored by our correspondent, the Fidelity Chairman, who is also the Chairman of Bank Directors Association of Nigeria (BDAN), said: “There’s a difference between fintech companies and fintech, which is just financial technology and every bank uses it. Every time you do internet banking, it is financial technology you are using.
“Fintech companies, in my opinion, are devoted solely to doing things that involve financial technology, they don’t do other things that traditional banks do. My feeling is that eventually, all banks will be using financial technology and we will be doing everything that the fintechs are doing today.” Speaking against the backdrop of recent funds attracted by the fintechs in Nigeria, which gave some of them valuations higher than that of some traditional banks, Chike-Obi said only a few fintech companies were successful. According to him, for every two successful fintech companies, there are a hundred that have failed. “We are not threatened by fintechs as people think. We are also making use of financial technologies, though we only adopt the ones that make sense to us,” he said.
He, however, noted that the banks would need to close some branches to fully adopt financial technologies. “The key for us is that the central bank has to allow us to close some branches across the country because now the idea of branch banking is not as effective as before. Now, people can bank without going to the branches.
You go to many branches now the branches are empty. So, one of the things that we have to look at is the cost of maintaining branches as opposed to the cost of using financial technology,” he said. Meanwhile, the fintech startups in the country continue to attract more foreign funding. In August this year alone, a total of $497.4 million was raised by Nigerian startups, who are majorly fintechs. This was led by Opay, which announced $400 million funding round in the month.
The funding was led by SoftBank Vision Fund 2, brought Opays valuation to $2 billion, and it came as the second-highest Series C round by any African startup or Africa-focus startup, Jumia’s $603 million being the first. Earlier in July, the Nigerian Investment Promotion Commission (NIPC) had disclosed that five of Nigeria’s young tech companies raised a total of $57.65 million in seed funding. According to the compilation of announced investments by the commission, the investors’ interests were mostly on startups offering financial services with technology, fintechs.
From the announcements made in July, four out of the five startups that secured funding are fintechs while one offers health solutions. Top on the list of the companies that attracted funding in the month under review is fintech startup FairMoney. The company secured a $42 million Series B raise to diversify its offerings and expand to ‘become the financial hub for its users. Tiger Global Management led the round, while existing investors from the company’s previous rounds, DST Partners, Flourish Ventures, Newfund, and Speedinvest, also participated.
The investment came after FairMoney raised EUR 10 million Series A in 2019 and EUR 1.2 million seed in 2018. Similarly, Nigeria rent-reporting fintech Esusu, raised a $10 million Serie A funding round worth $10 million by Motley Fool Ventures with participation from Predictive VC, The Equity Alliance, and other top angel investors. Esusu reports rental payments to major credit bureaus and allows renters to build their credit histories. The company said it is aiming at serving the underserved populations with the new funding.