Growing up, going to the bank was a big deal. The ability to “fill bank tellers” and “conduct yourself properly in the bank” used to be desirable life skills. Today, these procedures have been overturned by simpler financial solutions. The rise of fintechs has disrupted the traditional banking system by offering more convenient, digital-first services. Fintech solutions like mobile banking apps, payment gateways, and digital wallets have streamlined financial transactions, limiting the need to visit a physical bank. This convenience, speed, and often lower cost are why fintechs are gaining traction in Nigeria and beyond.
However, traditional banks still hold significant value, particularly for people who prioritise trust, security, and the established reputation of these institutions. For some customers, especially older generations or those sceptical of digital platforms, the physical presence of a bank provides a sense of security that mobile-based processes can’t match. Despite the rise of digital banks, traditional banks in Nigeria are still trusted by the majority of the population for their long-standing reputation and extensive branch network. Additionally, traditional banks offer a wider range of services that fintechs may not offer, like comprehensive wealth management or complex loans for large-scale projects. So, are fintechs really overtaking traditional banks? Or is there a point on the battlefield where a truce is drawn?
Industry Trends: Fintechs V. Traditional Financial Giants
Reports and statistics indicate that Nigeria is one of the leading African nations in the financial services revolution. The growth of fintechs in the nation is fueled by our young, tech-savvy population, and the need for more accessible, mobile-based financial solutions. Let’s take a look at some key industry trends:
- In 2021 alone, fintechs in Africa raised $1.4 billion, with Nigeria contributing more than half of that amount ($800 million).
- In 2021, fintech startups raised 59% of the total startup funding in Nigeria. However, in 2023, the financing of fintechs dropped – Only 128 fintechs secured funding, accounting for 31.5% of Africa’s funded startups. This was down 37.6%, compared to the results in 2022; and also below the 2021 figure of 184 funded startups. This indicates that investors were beginning to lose trust in fintech startups.
- Decentralised Finance, which operates without traditional financial intermediaries like banks, is becoming a heavily funded segment in Nigeria’s fintech ecosystem, especially in Web3. DeFi promises to revolutionise financial transactions by enabling peer-to-peer payments, loans, and investments on blockchain platforms, further disrupting traditional systems.
- Research reveals that most customers still have a higher level of trust in existing banks than in fintech startups. This may be due to the level of unlicensed fintechs penetrating the industry, particularly digital money lenders. Often referred to as loan sharks, these unlicensed fintechs violate customer privacy, leading to a mass ban of loan apps on the Google Play Store between 2022 and 2024.
- User penetration in the NFT market in Nigeria has reached 0.03% in 2024 and is expected to hit 0.04% by 2028.
How Fintechs in Nigeria are Challenging Financial Giants with Innovative Solutions
Nigeria’s financial landscape has undergone a dramatic transformation, largely driven by the rapid rise of fintech companies. These digital innovators are challenging established traditional banks by offering faster, more accessible, and cost-effective financial services. Fintechs have quickly gained ground where traditional banks have struggled, particularly in serving the unbanked and underbanked populations. By leveraging cutting-edge technologies like mobile banking, Decentralised Finance (DeFi), and digital lending, fintechs are redefining how Nigerians manage their money and access financial services. This section will explore some major financial solutions that fintechs provide.
Banking the Unbanked
Due to the stringent requirements and procedures associated with opening and maintaining traditional bank accounts, several Nigerians prefer to remain unbanked, particularly those in rural areas. In these regions, it is common for people to store their money in local safes known as kolo or tie it in their wrappers when heading to the farm. Banks were located far from their villagers, thus it was considered strenuous to walk several miles just to save or withdraw money.
However, the advent of digital financial solutions has dramatically changed this ideology. Today, even Nigerians in remote areas can easily open and maintain a bank account. Fintech platforms have made banking more accessible, allowing customers to:
- Open bank accounts on their mobile phones, eliminating the need for bank visits
- Transfer money through mobile devices, even without an internet connection
- Use their mobile numbers as their bank account numbers, making them easier to remember and manage
- Access their funds through mobile money agents, commonly known as POS vendors, widely distributed across urban and rural areas.
As a result of these solutions, financial inclusion in Nigeria has grown significantly from 56% in 2020 to 64% in 2023. The 2023 results show that only 26% of Nigerians are financially excluded, down from 32% in 2020.
While some argue that these digital solutions could be difficult for rural residents due to poor network coverage and limited technological literacy, fintechs have developed strategies to overcome these obstacles. One solution is the wide distribution of fintech agents across the country. Before a customer reaches one traditional bank, they will likely pass at least five fintech agents—Moniepoint, Momo, or Opay agents—who can assist with deposits, withdrawals, and account setup.
Another solution is USSD codes, which do not require internet access and are compatible with the simplest mobile phones, even what we commonly call “torchlight phones”. With just a SIM card and basic knowledge of how to dial a number, customers can conduct transfers, check balances, and perform other basic financial needs.
Digital Money Lending
Discussions of fintech in Nigeria are incomplete without highlighting the rapid rise of digital money lending services. These platforms have transformed the lending landscape, providing easy loan access. Reports indicate that between 2023 and 2024, 80% of loans secured by Nigerians were by fintech companies such as Renmoney, Moniepoint, Okash, and Opay. The preference for these digital lenders is easy to understand when compared to traditional loan options, which often involve lengthy processes. Some key benefits of digital loans include:
- Securing your loan in less than 24 hours
- No collateral needed
- Minimal documentation needed
- Flexible loan options
- Easy access to loans from your mobile phone
Robo-advisory: The Mobile Accounts Manager
Wealth management was once considered a luxury in Nigeria, reserved for the elites. Customers who had regular check-ins with their account managers in bank branches were categorised as “big people” or like we often say, “big fish”.
It wasn’t until PiggyVest came into existence that people realised they could shape their financial reality and future even before they started earning millions. PiggyVest took the traditional kolo idea and turned it digital, giving users a smart way to save and invest. This was the beginning of robo-advisory’s popularity in the Nigerian financial space. CowryWise, Carbon, and Bamboo are now among the leading fintechs that provide robo-advisory services, leveraging AI and advanced technology to help users manage their savings, investments, and financial goals. These platforms offer personalised wealth management plans tailored to customers’ financial status and targets. The innovation is growing so fast that assets managed by robo-advisory services in Nigeria are expected to reach at least $4.72 billion worth before the end of 2024. Robo-advisory services simplify wealth management, making it a fundamental part of financial planning for millions of Nigerians.
Smart Payment Gateways
Traditionally, if you buy an item, you pay in one of two ways—cash or bank deposit. But the narrative has changed today. Now people can shop and pay online, and receive their goods or services without leaving their houses.
Fintech companies power this shift, and Flutterwave is one of Nigeria’s leading players in this space. It simplifies payments with a seamless and efficient gateway, making transactions easier and more accessible.
Conclusion: Do Traditional Banks Still Stand a Chance?
The rise of fintech has significantly transformed the Nigerian financial space, improving customers’ realities and prompting traditional banks to evolve. In response to this shift, traditional retail banks have begun simplifying access to their services. Nearly every bank in Nigeria now offers a mobile app, an online account opening process, and even USSD codes for quick transfers. Additionally, many banks have introduced digital money lending services, providing fast loans, with minimal paperwork.
Another key innovation in traditional banking is the introduction of digital currency by the Central Bank of Nigeria, launching in 2025. This initiative aims to improve access to financial services, especially for the unbanked and underbanked populations.
So while fintechs have certainly taken the lead in revolutionising the financial sector, there is still room for traditional banks. To date, some customers would insist on traditional banking, irrespective of the numerous advantages that fintechs bring. Customer trust has been long established by existing financial giants, and this is their greatest edge over fintechs. Similarly, large-scale transactions are better provided by traditional banks than fintechs.
Therefore, each institution—whether fintech or traditional—offers unique strengths and advantages. The key is for all financial institutions, operating within the necessary legal frameworks, to prioritise growth. Continuous evolution is essential to providing inclusive, efficient, and accessible financial services across Nigeria.