Fintech – Industry executives said at the Virtual Couch Session at the just finished Lagos Startup Week that access to financial services is a sign of development in Nigeria.
Dayo Ademola, Managing Director, Branch Nigeria, participated in a discussion about “What next for Fintechs in Africa” with other leaders in the fintech sector. The discussion was hosted via Twitter Spaces by Benjamin Dada, the Nigerian Country Manager for Stitch.
Ademola said that access to financial services has been a sign of development in underdeveloped nations while discussing the significance of financial services in society. Celestine Omim, CEO of Klump, concurred, adding that the rise of fintech has been encouraged by the expansion of cellphone usage and the Central Bank of Nigeria’s cashless policy.
Olusola Amusan, Co-founder Vesti, added that the lack of access to financial institutions faced by many of the Nigerian population provided the opportunity for fintech growth.
According to Nubi Kay, Startup Program Lead at Paystack, 60–70% of funding for tech startups flows to the fintech sector, which has produced the majority of high-value businesses and unicorns in Nigeria, fintech is the backbone of commerce.
Ademola made the claim that the need to cover enormous gaps, such as the availability of credit and the capacity to provide small, quick loans without the burden associated with the traditional banking system, can be credited to the expansion of the fintech sector. She claimed that Branch International’s presence in a nation like Nigeria is a result of this divide.
Yet, this opportunity has also seen its share of challenges. Underwriting and scoring are the main problems with lending in the Nigerian system, whether it be small retail loans or larger individual and commercial loans. Basically, how do lenders determine who is worthy and what models can identify customers that don’t default in payment.
Ademola explained how Branch has solved this problem. “At Branch, we have built a really good model that is getting better daily at scoring people. As we don’t have an accessible nationwide credit score that can inform your lending decision, we have to depend on alternative data points. We have spent a lot of time fine-tuning the model, so we can make small loans available to people because it is nearly impossible to get a loan anywhere else. We are also good at predicting when people will pay us back.”
Branch International has issued over six million loans to Nigerians Since its inception while offering investment opportunities at their fingertips. The digital finance app offers services such as small loans of up to ₦500,000 ($1200) and long and short-term investment opportunities with one of the highest ROIs in Nigeria.