The Guardian’s Special Focus on Most Innovative and Value-Driven Fintech Firms in Nigeria

Globally, the financial services industry has come under intense competition from Financial Technology (FinTech) firms leveraging technology to deliver tailored financial service offering to consumers and corporate entities.

In Nigeria, Africa’s largest technology hub, investors are taking positions in the country’s growing tech ecosystem fuelled by attractive fundamentals such as the youthful and tech-savvy population, increasing smartphone and internet penetration, as well as a large unbanked population among other factors.

Having recorded investments of more than USD800 million in the last decade, Nigeria plays host to a strong and growing FinTech ecosystem with many start-ups providing innovative financial services which includes alternative lending and digital credit, target savings, digital banking, public revenue collection, electronic payments, investments and financial management, blockchain, digital currency and crowdfunding.

Indeed, the FinTech industry has experienced massive growth in Nigeria and their impact during the coronavirus crisis cannot be overemphasized. Furthermore, their operations has immensely contributed to the growth of Micro, Small and Medium Enterprises (MSMEs) in the country.

As the World Fintech Day is celebrated globally, in this special edition, The Guardian showcases three of the key players in the industry, viz:  CheckOff Finance Xpress Payment Solutions, and NairaEx. Their resourcefulness, innovativeness and tenacity have continued to enhance financial inclusion in Nigeria.

CHECKOFF FINANCE: Innovatively Creating Value, Deployng Tactful Business Model 

With core values focused on commitment, people first, innovation and teamwork, CheckOff Finance Company Limited has made name for itself as a reputable FinTech company at the forefront of creating value in the burgeoning Nigerian FinTech Industry.

Established five years ago and previously known as CheckOff Credit Systems Limited, having received the license to operate as a finance company by the Central Bank of Nigeria (CBN), the company’s growth has been driven by the zeal of a proudly Nigerian team, with the management team boasting a combined 40 years of experience in banking and retail lending, which has given the company an edge in offering financial solutions through the disbursement of loans to employees in both public and private sectors.

In a chat with Habila Musa-Luka, Co-Founder/Managing Director, he explained that the company primarily targets workers who are mostly low and mid-income earners through a partnership with their employers. 

According to him, the company’s model “offers deduction at source, so we partner with big organizations with a large number of employees and we deploy technology in granting loans to them. This strategy has helped to cut down on bad loans because we verify the status of these workers with their employers, which means someone is telling us a story about the loan applicant and this has helped us in making the right decision.”

Having enjoyed a fruitful career at Barclays Bank, UK, and Carbon Nigeria before he ventured into entrepreneurship, Musa-Luka described the journey with CheckOff Finance as one that is filled with opportunities and challenges through which the company has learned important lessons that have kept it growing. 

He added that “Those challenges made us stronger because they gave us a better experience and advantage over competition. Those challenges include bad loan repayment, customer acquisition, and getting it right with technology. We learned from our mistakes and that has helped us develop a resilient mindset.”

In overcoming the challenges encountered, he disclosed that the company has been able to build a strategy centred on data analysis which has helped in monitoring customer behaviour. This strategy has helped identify good customers and in building a healthy portfolio over the years.

To him, “In this kind of business, we rely a lot on data, so you need to monitor your data on a daily, weekly, and monthly basis to ensure that you are getting your money back, because it is easy to give out money, but repayment is where the problem lies. Therefore, you need to study customer behaviour to identify the good ones. We have also taken notes from where competitors have made mistakes because it is very important to learn from competitors in this business.”

On why CheckOff Finance is not targeting SMEs, Musa-Luka explained that the absence of policies that will guarantee repayment by these business owners is not encouraging. 

In his words, “SMEs are high-risk businesses and unfortunately, we are in a system where most of these entrepreneurs don’t have insurance cover for their businesses, so when there are eventualities, the credit given to them is already threatened. Initially, we gave loans to SMEs, but the experience we had wasn’t pleasant, so we decided to take a step back. If in the future, there are policies that support doing business with SMEs, we will be happy to do business with them.”

Commenting on the future of the FinTech Industry in Nigeria, he maintained that the industry has the potential for growth given the country’s growing population as well as the advent of newer technologies which explains why more start-ups are springing up in the FinTech space.

He noted that “Nigeria has one of the fastest growing populations in the world which means that the market is readily available. This is one of the factors contributing to the growth of the FinTech industry. The advent of modern technologies has also helped in reaching customers faster, monitoring customers, and understanding their behaviours. We are still scratching the surface because there is room for growth and that is why the industry is having lots of venture capitalists who are investing in the Nigerian FinTech space.”

How NairaEx’s empowering Nigerians in the emerging global financial market, by Bilewomo

As the first bitcoin exchange in Nigeria, NairaEx has over the years grown to become a fully automated cryptocurrency exchange that accepts Naira as its primary fiat. Established in October 2015, a period during which cryptocurrency was pretty new to Nigerians and people were falling prey to a lot of scammers, NairaEx came to the rescue as a one-stop shop for Nigerians to buy and sell bitcoin through its automated system. Yomi Bilewomo speaks on the company’s journey as a credible cryptocurrency exchange where customers are assured of quality service.

Strategies that drove the company’s success

Early on, we focused on building credibility with our customers, delivering quality services, and rewarding our community. We offer incentives like loyalty points through which customers are rewarded for every transaction they perform on our platform. This has become one of our customers’ favourite as they can redeem those points to buy airtime, pay utilities, and do some other transactions. We also have a saving feature which allow customers to lock their bitcoin and earn interest on it daily. For us it is not just about being a cryptocurrency exchange, it is about empowering Nigerians to play a part in the emerging global financial market and levelling the playing field for us as a people.

Uniqueness of NairaEx

We are a truly Nigerian brand and what sets us apart is our commitment to levelling the playing ground for Nigerians. Of course, we have more pronounced qualities like accepting Naira as our primary form of fiat, having one of the swiftest pay-outs in the crypto space in Nigeria, and the best rates in the industry, but our commitment to servicing Nigerians is our biggest differentiate.

Nigeria as a leading force in the African FinTech Industry

Nigerians are very innovative and I believe our ability to solve problems in our ecosystem and do them at scale is having a ripple effect across the continent. That’s one of the best things about technology, it is fluid. You can take a solution that works well in Nigeria and replicate it in Ghana or Kenya within weeks. Take international remittance for example, this used to be a huge problem for Africans but we now have companies like Africhange solving this problem across the continent with a strong security system to curb fraud. 

Ban on cryptocurrency and the way forward

We believe cryptocurrency is a fairly new space and the government still has a lot to learn about it. We can see that the government is already making efforts to be a part of this emerging field by introducing e-naira which is our very own central bank digital currency (CBDC). Few months ago, the Nigerian SEC proposed a framework for regulating the cryptocurrency space and just last month, the president of the apex bank submitted that FinTech and crypto are revolutionizing the way banks operate and there is an urgent need to rethink financial system regulation, supervision, and monetary policy implementation. These are all positive developments for the crypto space and we will be happy to collaborate with the CBN and other regulatory bodies to come up with policies that favour and protect the interests of Nigerians the world over.

XPRESS PAYMENT SOLUTIONS: Simplifying Financial Services Through Excellent Technology-Driven Processes

Xpress Payment Solutions Limited specialises in the design, implementation and provision of platforms for electronic payments, collections, bills payment and funds disbursement. As a licensed payment terminal service provider (PTSP) to supply and manage point of sale terminals, the company has continued to deliver on its mandate of simplifying and enabling smarter living in Africa, while also providing payment services around transaction switching and processing. With core values encapsulated in the acronym TIP-C; Teamwork, Integrity, Professionalism and Customer Satisfaction, the company offers dynamic, forward-looking, innovative and technology-driven processes aimed at ensuring excellent service delivery to its valued clients. Dr. Markie Idowu, Managing Director, Xpress Payment speaks on how the company has been creating value since it came to existence in 2016.

Xpress Payment’s Journey as a FinTech Company

It’s been a very interesting and exciting journey with the immensely talented and dynamic young team at Xpress Payments who are expertly navigating the current challenges in our industry, while robustly expanding opportunities for our clients and stakeholders through our products and services. The Covid-19 pandemic initiated the rapid adoption of digital payments and digital offerings to the masses. As such, we have continued to innovate around our existing product offerings, while also developing new ones in tandem with the ever-changing needs of our customers. We have also increased our collaboration with partners to enhance our value propositions, while also ensuring constant engagement with our regulators to ensure that processes and policies are developed around our offerings to adequately protect all stakeholders.

Growth strategy and service offering

In line with our strategic intent of “Making Life Easier and Smarter”, we are continuously designing innovative products, services and solutions that deliver outstanding customer experiences exceeding all expectations. Through our Xpress Agent Network, we are driving financial inclusion for the unbanked, underbanked, and even banked, with access to financial services at locations within reach, with speed, convenience, and familiarity they don’t get at the traditional locations. Our payment gateway, XpressPay offer possibilities which allow organisations (small/large businesses, corner shop, NGO, government MDAs, etc.) to receive payments by enabling their websites or mobile apps for the use of cards (Visa, Verve, Mastercard), bank accounts and eWallets without having to redirect customers to another site for payment to be made. Our one-stop value-added services platform, PayXpress, allow customers to purchase airtime and pay bills (electricity, cable subscription etc.).

Trends in the Nigerian FinTech Industry

Nigeria has a very large young population with recent trends showing significant growth in mobile phone adoption and internet penetration across all areas. More businesses and individuals are opting for electronic and contactless channels for their transactions rather than cash. The foregoing laid the foundation for the rapid growth of digital transactions, which was positively impacted by the Covid-19 pandemic that led to government-imposed lockdown. The lockdown ensured people had no choice but to resort to digital platforms for payments which benefitted FinTech firms tremendously. In addition, FinTech start-ups are going beyond areas where traditional players have stayed, driving disruptions and innovations in their chosen areas, in ways that are leading to lower transaction charges, faster and more convenient service fulfilment for customers. We have only scratched the surface because there is so much room for growth and expansion, investors can see this and that is why hundreds of millions in USD of new investments have continued to pour into the industry in recent years.

Role of the government in growing a vibrant FinTech industry

Like all businesses, FinTech start-ups also feel the weight of Nigeria’s poor power situation, multiple taxation, general high cost of doing business and insecurity. Government needs to look at these areas and take courageous steps to address these challenges. These challenges are not unsurmountable. We must however commend the CBN which has been at the forefront of formulating regulation in recent times that have aided the operations of fintech companies.