Nigeria’s financial sector has undergone profound transformation in recent years, with fintech platforms rapidly gaining ground in a space once dominated by traditional banks.

And its rise has significantly altered the financial sector, offering innovative solutions that cater to the evolving needs of consumers and businesses alike. A World Bank report highlighted that Nigeria’s fintech sector constitutes about one-third of Africa’s financial services market, projected to reach $230 billion in revenues by 2025.

Similarly, Nigeria’s informal sector has experienced a significant shift towards digital financial services, with fintech platforms playing a pivotal role in this transformation. A 2024 report by Moniepoint Inc., in collaboration with the Federal Ministry of Industry, Trade, and Investment, and the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN), revealed that 39.5 per cent of informal sector businesses utilise digital banks for savings, while only 11 per cent rely on conventional banks.

The rise of fintech banking is not just a fleeting trend; it represents a deeper shift in how Nigerians view and interact with financial institutions.
This is because platforms like Opay, Palmpay, Moniepoint and many others have stepped in to address the long-standing frustrations often experienced from services by the traditional banking sector, evidenced in inefficiencies, high transaction fees, and limited accessibility.

The inefficiencies of the traditional banks were exacerbated in 2023 when the CBN attempted to fully implement the cashless economy policy. Then, cash withdrawals were severely limited. With poor services by traditional banks, many Nigerians turned to digital payment solutions as a lifeline. This marked a turning point in the country’s financial history.

Fintech platforms like PalmPay, Opay and a host of others emerged as reliable alternatives, offering quick, hassle-free transactions that kept businesses running during the crisis. Since then, other fintech platforms have joined the fray to the delight of many Nigerians, especially traders.

A report by the Nigeria Communications Commission (NCC) said since 2020, fintech platforms have facilitated the opening of over 20 million new bank accounts, significantly reducing the number of unbanked Nigerians and supporting the Central Bank of Nigeria inclusion drive.

Also, the Enhancing Financial Innovation & Access (EFInA) 2023 Access to Finance (A2F) Survey revealed that financial exclusion rate in Nigeria decreased from 41.6 per cent in 2018 to 26 per cent in 2023, largely attributed to the proliferation of mobile money platforms and digital financial services.

In markets across Nigeria, traders are increasingly turning to fintech platforms to achieve faster financial transactions. As of August 2022, fintech platforms could serve only approximately 35 per cent of Nigerians, correlating with the nation’s smartphone penetration rate, suggesting that device accessibility limits fintech reach. Platforms like PalmPay and OPay have each amassed over 30 million users, reflecting the rapid adoption of fintech services. The Enhancing Financial Innovation & Access (EFInA) Access to Finance 2023 Survey reports that in 2023, 45 per cent of Nigerian adults engaged in digital financial services, up from 34 per cent in 2020.

A hairdresser in Ikorodu, a suburb in Lagos State, shared her experience, saying: “I use Opay because the app is very straightforward. I don’t need to keep my clients waiting just because I’m waiting for an alert.”

At the Sanwo-Olu International Market in Lagos, several traders also shared their experiences. One of the traders, Mr. Aremu Kabiru, praised PalmPay’s services, branding them “stress-free”. Another trader, who simply identified herself as Mrs. Asiat, recounted how PalmPay’s quick account set up helped her during the cash crunch era.

“Many traders refused to accept bank transfers because of delays in alerts. PalmPay agents came to the market, offered easy account setups, and it made a huge difference,” she said.

Fintech platforms have also gained popularity among traders by addressing customers’ complaints swiftly. Sharing his experience, the proprietor of Great God Nigeria Limited, a provision store in Ketu area of Lagos, Mr. Chukwuemeka Godswill, said: “I have other bank accounts, but I chose Opay for my business because they resolve issues quickly. When I have payment problems, I don’t have to leave my shop to complain. I just contact their customer care and it’s usually resolved within 24 hours,” he said.

Free transfers are another major attraction for fintech users.

“Traditional banks often charge high fees for even small transactions, but platforms like PalmPay and Opay have eliminated these costs. For traders who frequently send money to suppliers or pay employees, these savings add up significantly,” a trader said on the condition of anonymity.

In an interview with The Guardian, a financial expert, Ibrahim Lukman, said: “The rise of fintech platforms is fueled by Nigerians’ demand for better financial solutions. Many people were frustrated with high fees, limited access to credit, and the inefficiencies of traditional banks. Fintech platforms stepped in to address these challenges, offering faster and more accessible services.”

Ibrahim also highlighted how fintech platforms have disrupted traditional banking. “Fintechs are forcing banks to innovate by providing faster and cheaper services, like mobile wallets and payment platforms. These platforms have reduced the need to visit physical bank branches, making life easier for users. It’s also now easier for people who were previously excluded from accessing loans,” he said.

Speaking with with The Guardian, The Head of Marketing and Public Relations at Palmpay, Mr. Femi Hanson, highlighted how fintechs are reshaping Nigeria’s financial ecosystem.

“When we entered the market, we identified critical pain points such as unreliable transaction networks and limited access to traditional banking services.

“We invested heavily in building a proprietary financial infrastructure that ensures a 99.5 per cent transaction success rate within 10 seconds. This commitment to reliability has earned us the trust of over 35 million users,” Hanson said.

Further findings showed that fintech platforms have also introduced features that directly address traders’ needs. For instance, Opay and Moniepoint deliver ATM cards directly to users, eliminating the need to visit a bank branch.

This level of convenience has been a game-changer for small business owners who cannot afford to leave their shops and go and sit down in the baking halls just to be issued ATM cards.

The ability of the fintech platforms to offer innovative services tailored to the unique needs of Nigerian users is also luring customers to them. PalmPay’s “Cashbox” feature, for example, acts as a digital piggy bank, allowing users to save money while earning daily interest. This feature has been particularly popular among traders looking to maximise their savings without incurring high transaction fees.

In addition to savings tools, PalmPay, for example, offers cashback rewards for everyday transactions.

“Our cashback system incentivises users for routine activities like bill payments and money transfers. These rewards may seem modest, but over time, they create a financial cushion that helps users combat the effects of inflation,” Hanson explained.

Despite the rising acceptability of fintech banking platforms by Nigerians, traditional banks still hold a significant share of the market due to their established presence and customer loyalty. For fintech platforms to compete effectively, they must continue to prioritise reliability, security, and user satisfaction. Findings showed that one of the most significant contributions of fintech platforms has been their role in promoting financial inclusion.

According to the World Bank, over 40 per cent of Nigerians remain unbanked, with limited access to formal financial services. Fintech platforms are addressing this gap by offering easy account setups and low-cost financial solutions.

“Our goal is to provide a holistic financial ecosystem that caters to the immediate and long-term needs of Nigerians,” Hanson added.