Several aspects of the Nigerian financial services are getting digitised and the investment space is not left out. Financial service delivery is gradually merging with technologies in every aspect. The proliferation of fintechs into the investment sector is in its very early stages and will force old industry players to start thinking in terms of digitised and easy solutions for customers to transact.
Not so long ago, fintech was a new innovation in Nigeria and there was a huge gap between technology and financial service delivery. However, things have since changed and every business is seeking digital solutions to the services they offer.
What is FinTech?
FinTech means financial technology – this consist of carrying out financial transactions and services such as banking, investment etc by utilising technological solutions. Through the proliferation of techs in the financial sector in Nigeria, most institution now provide financial services using software, thus making financial transactions efficient and fast.
FinTech companies are businesses that provide financial services to the public using software and applications. Customers can easily carry out financial services from anywhere without needing to go through the hassle of being physically present in the financial institution,unlike the traditional financial system. These techs make it easy and modern.
So, to further simplify it, FinTech is a technical tool that supports financial services and makes the delivery of financial services easier and more flexible.
FinTech in Nigeria
While some people might see all financial sectors as one, I like to look at the Financial Industry as a whole that consists of different parts. And these parts I usually categorise into different sectors, consisting of Banking, Investment, Pension, Payment Gateways and Insurance. A trend seems to be springing up; it consists of a single company having a combination of features of one or more of these sectors. This is supposed to in turn require the acquisition of several licences from the different regulatory bodies that are charged with regulating these different sectors. For example, a popular app in Nigeria, started as a loan granting app but gradually transcended into savings, payment services and investments. Same for another popular application, which started as a petty savings app and quietly delved into the investment space as well.
These tech solutions capturing a large market share that consists of tech savvy and young Nigerians contributed majorly to the improvement of the financial sector in Nigeria, especially the banking sector, who embraced, prioritised and introduced application softwares to make payment, savings and other banking services easier for their customers.
While the banking and Payment Gateway sectors have moved in great strides in the FinTech space, the other sectors have not really embraced it as much. There are still gaps to be filled and tech companies are seeking to fill those gaps.
In June of 2021, the Nigerian Securities and Exchange Commission, issued a circular banning online investment apps such as Bamboo, Cowrywise and etc from offering investment services to Nigerians as they have not been registered with SEC as investment companies.
Prior to this, some Fin Techs seeking to play in the investment space would partner with a licensed Capital Market operator or just go ahead and invest their users funds without license or regulation. However, after the SEC circular, there was scramble to become licensed so as not to lose users.
On the other hand, it has become apparent that SEC would rather these FinTechs obtain licenses which would make for easier regulation and enable them to operate in the Investment space unhindered. This led to the granting of the first Investment tech licences to some of these tech companies and opening up the gates for the tech companies into investment space.
It has become apparent that the Investment tech revolution is here and the regulators are keeping everyone on their toes to ensure standard and efficient services to the masses. We are witnessing the early stages of seamless and flexible investment industry.
