Looking to start a fintech company? This is a quick guide on how to start a fintech company in Nigeria.
A Background on the Nigerian Fintech Industry
With the recent surge in the number of fintech in Nigeria, the question ‘how do I start a fintech company in Nigeria,’ has been asked often. This is partly because the Nigerian fintech industry is fast-growing and partly because the Nigerian tech and software industry is growing fast.
What is A Fintech Company?
According to Investopedia, ‘Financial Technology (Fintech) is used to describe new technology that seeks to improve and automate financial services delivery and use. Fintechs are used to help companies, business owners and individuals better manage their financial operations, processes, and lives using specialized software and algorithms used in computers and smartphones.
Over the years, fintech has advanced from being owned and run by established financial institutions, to be a more consumer-oriented services provider.
Thus, fintechs are no longer always a branch of established financial institutions.
There are now standalone fintechs that provide core fintech services.
Traditional commercial banks in Nigeria have followed the trend, adapting and innovating to guarantee their survival in an industry filled with robust fintech startups and digital banks.
The investment banks in Nigeria are inclusive as the sector has become a survival of the fittest and investors and venture capitalists are pouring in lots of funds into the industry.
The fintech industry now includes different sectors like retail banking, fundraising, education, nonprofit, investment management, crypto banking, and lots of others.
Fintech now has applications in diverse other industries. Coming down, both old and new Fintech companies in Nigeria aim to improve financial procedures and increase industry automation of financial processes. The country has seen rapid growth in the industry which is simultaneous to technological advances in the financial sector.
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History and Evolution of Fintech in Nigeria
Fintech industry growth in Nigeria, just likely globally, has been on a continuous rise. There has been a steady influx of fintech startups in Nigeria, with each looking to offer better services and outdo existing ones.
These financial technology companies in Nigeria have made things easy for everyone has worked towards extending the financial sector to other industries.
For the purpose of this article, we will divide the history of fintech in Nigeria into three sections;
- Fintech Past
- Fintech present and
- The future of fintech in Nigeria.
Historically, the advent of the Nigerian fintech industry started when some Nigerian banks start to leverage technology to make banking easier; from telephone to computer and in recent times, ATMs.
This evolution can be traced to post-1986 following the Structural Adjustment Program (SAP) era which tightened things and triggered heightened banking sector competition.
Following that was the launching of the Payment Systems Vision 2020 (PSV 2020) in 2007.
This move by the CBN was the birth of another era in the Fintech industry. This is because it was the first time the banking regulatory body set a policy geared towards achieving a cashless society.
Since then, there has been a steady influx of fintech companies in Nigeria with each one developing an entirely different idea.
This has led to the country having an estimate of over 200-250 fintech companies and operators operating in the country.
There are now several fintech startups and companies in Nigeria with each offering its unique selling points and making banking and financing seamless.
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Categories of Fintech Companies in Nigeria
Fintech companies cut across different industries and offer services that are beneficial in diverse ways.
The industry has different sub-sectors ranging from banking to insurance, investments, crowdfunding, money transfers, agritech, cryptocurrency, etc.
Comprehensively, some categories of fintech companies in Nigeria include;
- Research and Development
- Online Banking
- Digital money
- Blockchain and Cryptocurrency
Regulation of Fintech Companies in Nigeria
Undeniably, such an industry involving lots of funds can’t operate without a regulatory body.
The Central Bank of Nigeria (CBN) regulates fintech companies in Nigeria.
As a measure of managing risks, the CBN places a financial barrier for every fintech startup in Nigeria to have a minimum of $275,000 before entry into the market.
This is to ensure funds are secure and operators are credible.
If you want to start one, here is a quick guide on how to start a fintech company in Nigeria.
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A Quick Guide to Starting a Fintech Company in Nigeria
Step 1: Identify a Suitable Niche
The fintech industry has different sectors including Payments, CreditTech, InsureTech, Personal Finances Management, Crypto, AgriTech, etc. Identifying a sector in the industry will help you channel your effort and develop a quality product that’ll compete among top tech companies in Nigeria.
First, you need to identify a target audience and a problem, then develop a solution to the problem.
Step 2: Get Familiar with the Regulations
After narrowing down to a niche and finding out a problem to solve, the next step is finding out the regulations guiding the industry and the specific niche you selected.
Who regulates fintech companies in Nigeria?
This is the question you ask at this stage. This is because the banking and finance industry is a critical one and is strictly regulated. You will review the regulations and find out if you meet up with them.
The toughness of the laws and regulations guiding the financial industry helps to mitigate fraud and crime in fintech Nigeria.
The Step 3: Develop a Unique Selling Point (USP)
This is what many won’t tell you. The truth is that the fintech industry is getting more competitive with each passing month. To thrive, you need to develop/discover your USP, a unique angle. This will give you an edge in the market.
As an entrepreneur, think outside the box and offer something special that will solve a problem others haven’t solved.
Step 4: Apply and Obtain the Required Licenses
I have to say the application and obtaining of a license for a fintech company in Nigeria is not an easy feat. The license you will need depends on the niche you wish to concentrate on.
Seeking licenses might take you across different regulatory bodies including CBN and the Nigerian Communications Commission (NCC) if your intending fintech company will offer a service that includes mobile phone numbers.
Step 5: Register Your Business Name
Just like every other business in Nigeria, your fintech company must be registered in Nigeria under the Corporate Affairs Commission (CAC).
Registering your business in Nigeria involves several steps, structured to ensure there is no clash of business names.
The Step 6: Hire the Right Talent and get the Right Technology
Developing a fintech company involves lots of software development. You will need to hire the right software and cybersecurity experts.
Furthermore, you need to seek out the best technology to use to offer your customers the best and have a secured product.
No fintech startup relies on third-party frameworks, so it is crucial that you develop your frameworks and software from scratch.
With finance, comes a high risk of a data breach. You sure don’t want to be caught up in that.
Step 7: Start by Creating a Minimum Viable Product (MVP)
This is the step where you develop and roll out the product. Starting with a Minimum Viable Product is recommended so you can create a product with the basic features. Then from feedback, you will improve on what you have to suit your market.
After these steps, you can proceed with two crucial follow-up steps;
- Seeking investors and
- Building partnerships
Wrapping on with How to Start a Fintech Company in Nigeria
With these steps fulfilled, you are on your way to owning a Nigerian fintech company. If you found this quick guide on how to start a fintech company in Nigeria helpful, kindly hit the share button and drop a comment.