Evolution of the Nigerian Fintech Sector

The history of financial technology in Nigeria has some parallels to the growth of the global financial industry and the developments in digital technology. Customers were going to dictate the new way of doing things and to meet the new needs financial institutions would need to rely on technology.

First, while the term Fintech derives its origin from a Citigroup initiative in the early 1990s designated the ‘ Financial Services Technology Consortium’ which aim was to facilitate technological cooperation among industry players, its application can be traced back to the period between 1866 and 1933 when the first Atlantic cable was laid in London.

Between 1866 and 2008 the history of finance has become intertwined in a mutually reinforcing way with technology. From the electronic payment, bank ATMS, electronic stock trading, bank mainframes, and record-keeping systems in the 1960s to 1980s, financial technology evolved to the internet and e-commerce business models and the introduction of online stock brokerage websites in 1990s. Retail financial services have further digitized via mobile wallets, payment applications, robo- advisors for wealth and retirement planning, equity crowdfunding platforms for access to private and alternative investment opportunities and online

lending platforms.

In Nigeria, it wasn’t until the turn of the millennium that fintech began to look like a serious space, with independent players providing services in different segments. Prior to then, the space was largely a domain for banks and their software vendors. In fact, fintech was then known as electronic payment.

Nigerian banks quest to transform their services leveraging new technologies contributed in no small measure to the advancement of the fintech space in the country and led the foundation of the digital banking era in the country.

According to Olaniyi Yusuf, Managing Partner of Verraki, the rise of Fintech in Nigeria is not surprising, given the youthful demography of Nigeria, commercial acumen and energy, the convergence of mobile telephony, internet, increased access to computing facilities and storage facilities, and of course, the impact of Nigerians in the diaspora some of whom returned home with interesting ideas, global knowledge and network.

Prior to the fintech era, most of the early start-ups in the financial service sector were hardware box providers, before they evolved into software solutions. Some of these companies include Computer Warehouse Group, CHAMS (dubbed Computer Hardware and Maintenance Services), and Inlaks among others.

Then, what most did was to buy software like core bank applications and ERP products from international organizations and resell to banks.