More financial technology (fintech) brands are emerging daily, changing the business and marketing landscape. They are simply creating a world of financial inclusion for even those in the hard-to-reach areas globally as the brands battle for consumers’ wallets.
More so, more brands are emerging or diversifying into the sector and this has led to intense competition among players in a bid to get a sizeable churn of the market share.
The global fintech market size was valued at $110.57 billion in 2020 and is projected to reach $698.48 billion by 2030, growing at a CAGR of 20.3% from 2021 to 2030, according to Allied Market Research.
Specifically, the fintech ecosystem has been helping to bridge the financial gaps and most digital banks today are offering customers a top-notch banking experience. Largely some of the digital financial brands target the growing youthful and tech-savvy customers, especially in a country such as Nigeria that has a large youth population.
Some of the companies operating in that space now offer services such as money transfer, credit facilities, Buy Now Pay Later (BNPL), savings including using the ajo (thrift) scheme method and charge zero interest on loans among others. Smartphone penetration has helped drive the growth of the sector and more branchless banks are surfacing.
Revealing how some brands have been changing the ecosystem with their offerings, McKinsey research reports that Fintech activity in lending is picking up, thanks to the fact that fintech can leverage payment data to determine lending risk more easily and utilize smartphones as a distribution channel. For example, fintech startups such as Carbon and Renmoney have successfully leveraged alternative credit-scoring algorithms to provide instant, unsecured, short-term loans to individuals.
A few fintech, such as Migo, have also stepped up to offer unsecured working-capital loans to SMEs with minimal documentation. Banking fintech solutions have been fast followers here with leading banks launching digital lending platforms like Quick Credit by GTBank (now GTCO) and Quickbucks by Access Bank.”
Also, the fintech sector is getting its share of investment from seed funds lately which further helped them expand their offerings and capabilities.
Kuda Bank, formerly Kudimoney, raised $25 million in a Series A round and also, Flutterwave raised $170M, now valued at over $1B.
It is an interesting time as Flutterwave, OPay and Andela joined Interswitch and Jumia as five out of the seven unicorns on the continents.
The Guardian in one of its reports in 2021 disclosed that the leading Nigerian Fintech brands in the country comprise Flutterwave, Interswitch, Paystack, Paga, Carbon, Remita, VoguePay, Opay, Lidya, Kuda, Piggyvest, Decagon.
Booming BNPL and Consumers’Trust
The most recent services some of the fintech now offer is the Buy Now Pay Later (BNPL), an offering that is not uncommon in many developed economies while Africa is fast gaining acceptance. It allows shoppers to purchase products online and pay in instalments with nominal or no fees, while Affirm, Afterpay, Klarna, and Quadpay are some of the global players in the space.
According to Globe News Wire, the Q4 2021 BNPL Survey, BNPL payment in Nigeria is expected to grow by 111.2% on annual basis to reach US$ 1920.3 million in 2022.
Also, the report stated that the medium to long-term growth story of the BNPL industry in Nigeria remains strong. The BNPL payment adoption is expected to grow steadily over the forecast period, recording a CAGR of 54.0% from 2022-to 2028. The BNPL Gross Merchandise Value in the country will increase from US$ 909.1 million in 2021 to reach US$ 25615.9 million by 2028.
So to reach and service consumers, online banks are partnering with notable businesses and brands to offer the BNPL and it is convenient for people to purpose anything they so desire without having the finances. This is even different from services like loans and saving offered by brands like Carbon, Kuda, Chipper Cash, and others. Before that, some businesses have been giving customers the opportunity to pay some percentage of what they purchased and pay other parts in instalments.
“If we look at Buy Now Pay Later it’s no different from credit. You are just splitting your payments. The only difference is the retailer is picking up the interest tab, not the customer,” chief marketer David Sandstrom at Klarna said.
In Nigeria, a customer raised concerns if BNPL was something possible in the country and questioned if it’s sustainable when he stated that he saw the advertisement of Carbon on some Out-of-Home sites across Lagos.
In his words, “Is this happening in Nigeria or are my eyes deceiving me? I have been seeing this advert ‘Shop Now And Pay Later’ by Carbon on different billboards in Lagos. I think it is only people abroad that buy and shop with a credit card and pay later. I told myself, ‘I hope this is not a scam by carbon’ because somethings in Nigeria you have to do due diligence before you embark on something. However, one of my friends has tried it and I plan to try it as well but how long can they sustain it?”
Carbon introduced ‘Carbon Zero” as a BNPL offering and it is available in various stores and not just its affiliate store partners. It does not charge customers any interest. One of the reasons one of the customers asked if would be sustainable.
Also, customers have access to an unlimited range of products and brands in fashion and beauty categories, gadgets, furniture, electronics, and more service-based experiences like travel, education, and healthcare, according to the statement released by the company.
On another note, as part of the strategy, the fintech brands have been expanding to other countries outside Nigeria.
There is a need for more of the fintech to embark aggressively on marketing drive, online and offline. It is important to state that some have not been doing badly. Chipper Cash with the signing of Damini Ebunoluwa Ogulu, popularly Burna Boy, as partner and brand ambassador has changed the narrative and its out-of-home advertising has been a phenomenon but they need to use it to further connect with young people and music lovers.
Kuda on its part has extended its publicity drive with BRT advertising and other platforms, spreading across some strategic states. Carbon is also competing favourably and it has more presence in Lagos with its strategic OOH adverting deployment which is giving popularity to BNPL.
Asides from this Kuda is engaging on its social media platforms compared to some of its competitors. It follows trends but can do more to further engage customers.
However, it is believed that online banking and fintech brands will integrate BNPL into their operations, considering its importance and the level of impact in many other markets.
Carbon has set the stage but they need to intensify their publicity drive and extend their advertising into other cities and states. Also, continuous to embark on public relations, consumer engagement, and other marketing activities.
It is expected that more brands will begin to integrate BNPL into their offering as stated earlier but some experts have raised concerns on how they would be able to recover their loans, especially from customers who default and they are not forced to embark on the approach most loan or online money lending companies do, sending messages and calling messages to some contacts of a defaulter because they have access to some data.
