Mastercard’s Fintech Business Development Manager, Tolulope Adeyinka, has said that Nigeria does not have enough fintechs yet. This is despite being one of the countries in Africa with the highest number of fintechs.
Speaking exclusively with TechCity at the just concluded Tech Unite Africa conference, Adeyinka noted that Nigeria has only achieved 50-51% financial inclusion, and needs to reach 80%, a target set by the Central Bank of Nigeria a few years ago. He also posited that amidst the recent cash crisis faced by Nigerians, urging regulators and players in the ecosystem to invest in better technology to increase capacity as the deadline set by government for a fully cashless economy inches closer.
Adeyinka advised businesses which are hesitant about transitioning to fintech to prepare and be ready for the 4th industrial revolution, which involves leveraging data and artificial intelligence.
Excerpts of Tolulope Adeyinka’s chat with TechCity
Are there too many fintechs in Nigeria as it is, and what are the advantages of transitioning to fintech for businesses?
I don’t think we have enough fintechs in Nigeria today, although Nigeria has one of the highest number of fintechs in the continent. I mean, if you consider the big four which are Nigeria, Egypt, Kenya and South Africa, you’ll realize that Nigeria also attracts the highest investment in the fintech industry/startup eco system. One interesting thing is that we’re still in 50% or 51% financial inclusion. Who said we cannot get to 80% which is a target that the CBN has set some years ago for us to get to? We missed that in 2020 and if we’re going to achieve that target, according to what I was speaking about earlier at the event is that, we need to find a way to capture people that are not within the digital economy. Fintechs have the capability to be able to go to these “bottom of the pyramid” people and financially and digitally include them. When they’re digitally included and we begin to capture their activities within the economy, we realize that this can lead to economic development, so, we do not have enough yet. Until more people are captured within the digital space that’s when we’re saturated, but we also know that these fintechs have a capacity problem and those are the areas where we’re trying to ensure that we deploy our technology to support them to achieve these goals. Because we know they’re the only ones that can help achieve this goals. So we haven’t gotten there yet.
How do fintechs enable businesses to streamline their financial operations, and what impact does this have on their bottom line?
One of the things we should thank fintechs for is their ability to help businesses attain efficiency, because if there is no efficiency in a business, it is difficult for that business to grow. One of the things fintechs have been able to do successfully for businesses in Nigeria and Africa in general is being able to provide customer experience oriented solutions. Before now it was difficult for businesses to be efficient in the way they approach the market, but providing digital approaches to this businesses, for instance, a
business can have access to HR solutions, inventory management solutions that can ultimately help them to attain a situation where they can access funding. Before now, one of the key problems that small businesses have had is that they don’t have access to funding cause they don’t have financial history with banks so it is difficult to track their performance. But with all this solutions fintechs are bringing, this businesses become more efficient and over a period of time, you can leverage the data that has been generated, to provide funding for this businesses for them. To be able to grow. So there is an impact ultimately in the solutions we’re able to bring for them to grow so I think that answers your question on what impact it has on their finances.
How will you assess the impact of the fintechs in light of the recent cash scarcity?
That’s an interesting topic for me. You see, before now, when the cashless policy was developed, it was supposed to be implemented in phases but I think the naira redesign crashed the system in such a way that everybody in every city was looking for the same cash at that time. If we didn’t have fintechs at that point, it would have been worse. Because you now realize that, there are some merchants that have created ecosystems where they provided additional capacity to the payment system in general. They were able to make and receive payments through those eco systems. For example, I don’t want to mention names but you now see that people see the need to be able to participate in digital economy because without that, commerce cannot grow. It is now eminent for regulators and players in the eco system to see how they can invest in better technology and increase capacity so that over time Because the federal government has said that the cashless policy is going to be fully implemented by December 2023.
What are some of the risks and considerations businesses should be aware of when adopting fintech solutions?
One of the primary things that digital payment brings to businesses is growth and expansion. If they’re able to accommodate digital payment, they get more customers and when they get more customers, they make more money. Another thing is cyber security. Businesses need to be conscious of cyber security because when you’re included in the digital economy, there would be cyber threats and this is why entities like Mastercard exist. We provide the cyber security solutions for fintechs to be able to protect the digital eco system from attacks that can destroy businesses and losses that rise from such attacks.
What advice would you give to businesses that are hesitant about transitioning to fintech?
I think they would be shooting themselves in the foot if they don’t enter into the digital economy. The 4th industrial revolution is here whether we like it or not. If you remember how the first, second and third revolutions happened, where industries were built with gas, or the third revolution when there was nuclear power and all that. But now we are talking about Artificial intelligence, leveraging data, etc. A business that does not leverage data cannot access finance, a business that does not accept digital payment will be unable to grow. My advice to such businesses is to prepare and be ready for whatever outcome may arise as a result of
the government’s cashless policy.
Because we have seen an example of what can happen when businesses just sit and don’t get patronage because of lack of cash. Do businesses really want that to happen to them again? There are solutions out there that can be provided to these businesses for them to be able to start accepting payment from their customers. And what we’ve seen in the market is that businesses can have up to 40 to 50 percent growth in sales if they start accepting payments through digital means. So my advice to them is that if they want to grow, they should start now.