A Recap of FintechNGR Fintech Outlook 2022

On the 10th of February 2022, the Fintech Association of Nigeria (FintechNGR), hosted the Fintech Outlook 2022. It was an annual intellectual webinar which attempted to take a 360 overview of Nigeria’s fintech space, what it portends globally and how stakeholders can draw industry insights.

It was an insightful conversation on different sectors in the Fintech space such as payments, infrastructure, wealthtech, lending, startup scale, legal and regulatory framework, etc. Some of the speakers were Ade Bajomo, President FintechNGR; Mitchell Elegbe, CEO, Interswitch Nigeria; Odunayo Eweniyi, CEO, Piggyvest; Daniel Awe, Head, Africa Fintech Foundry; Tosin Eniolorunda, CEO, TeamApt and Nkebet Mesele, Senior Director (Sub-Saharan Africa), VISA.

In this article, you will find vital takeaways I penned down from the webinar.

In his opening speech the President FintechNGR, Ade Bajomo said, the industry recorded a lot of highs in 2021. Electronic payments transactions have continued to grow astronomically. Spending on Point of Sale (POS) was also at an all time high in Nigeria. In 2021, African startups attracted $4.65B in disclosed funding alone. Fintech alone received 62% from that amount and Nigeria received a whooping $1.37b for its startups.

Going forward, there’s a need to develop and deepen our national talent pool, encourage research and development to get our innovators and startups on a higher plane. Also, foster an environmental supportive regulation to grow the industry, facilitate local investors to participate, position startups and innovators to build and develop durable strategic intellectual properties.

Startup Marketplace

Fintech NGR startup marketplace was introduced in the session. It is a simple platform developed to provide Fintech startups support measures in business development, operations, financial planning, marketing, accounting, auditing, logistics, capacity building and funding to survive during and post COVID-19 crisis. The platform creates a bridge between startups and service providers.

FintechNGR is the super admin of the platform to monitor and approve account creation process, check chat history (when required), deactivate accounts (if need be).

Startups enjoy fast professional services at subsidised rates and the platform allows them to make requests for a service/product, initiate chat with provider, make payment for the product/service and rate the service/product.

Service Providers can create a profile (which shows rating) and add their products/services. Providers are notified via email if there is a request for their service.

Payment outlook for 2022 by Mitchell Elegbe, Group Managing Director Interswitch

Despite all the achievements of Nigeria Fintech startups, payment penetration is still less than 20%. This means there's still a huge 80% to go after. A way to close that gap is to get enough investments into other tech enabled sectors such as healthtech, transtech, agritech, logi-tech, etc.

When payments are embedded into these sectors, the payment penetration rate will increase. There would also be more Foreign Direct Investments (FDI) going to other sectors apart from Fintech.

To curb the issue of the great resignation and massive exit of tech talents from the country, there would be innovation (like Andela) to connect startups with top tech talents anywhere around the globe.

Infrastructure Outlook for 2022 by Olufemi Sojinrin (Chief Information Officer for NIBSS)

The continuous rise of blockchain and cryptocurrencies. More API's growth for Fintech to innovate and provide an improved experience for customers. AI Robotics and Intelligence censors will continue to gain adoption.

Payment initiation will keep changing from cards and accounts to digital wallets that are supported by open banking. Telcos will continue to play a key role in driving payment.

Trends and Projections in the Wealthtech Outlook for 2022 by Odunayo Eweniyi

Startups need to do more to stand out from the crowd. They can do this through clear communication, simplified account navigation and great customer support.

Growing startups need to offer better benefits, new forms of savings and new forms of pensions. Startups around workplace savings and wealthtech are going to emerge. Workplace savings and retirement products and processes across the industry will start to get digitised.

Wealthtech startups will use data aggregation to put their clients first. Wealthtech companies need accurate, up-to-date and complete information to allow faster decision-making. Therefore, startups prioritising data science, data aggregation and data mining are going to have the edge.

Retail Investment platforms will drive wealthtech. The startups focused on individual benefits B2C retail investment platforms will drive wealthtech in 2022.

Non-traditional asset classes such as Cryptocurrencies, NFTs and DeFI will see increased adoption. There will be a rise in the number of companies that enable users to buy, hold and sell these assets.

Further consolidation by traditional banks and finance houses in the form of in-house builds, acquisitions and partnerships.

Lending Outlook for 2022 by Laurin Nabuko, CEO of Fairmoney

More Venture capitals will flow into the ecosystem which would lead to better and more sustainable solutions for the end customers in Nigeria.

Increased regulation of lending activities on digital players. Inter-agency collaboration between Federal Competition and Consumer Protection Commission (FCCPC), the Independent Corrupt Practises Commission (ICPC), the Economic and Financial Crimes Commission (EFCC), the Central Bank of Nigeria and the the Nigeria Data Protection Bureau (NDPB) to tackle unethical lending practises. The development of guidelines/frameworks for lending operations.

Fintech to continue driving growth in Consumer/SME lending. More entrants in the market given the unmet consumer needs. Increase in products like longer tenures, BNPL, SME lending, etc.

Pre-election jitters. Significant economic activities centred around election campaigns. Some campaign activities may be indirectly funded by credit. This will have a long term impact on Non-performing loans (NPL) depending on which way the tide turns.

Projections on Digital Banking for 2022 by Tosin Eniolorunda, CEO TeamApt

Data Science startups will emerge to help with credit decision processes and fraud detection. These startups will enable products/services to be delivered to the customers easier, faster and cheaper.

The growth of embedded finance and APIs. More players and products are coming into the fintech industry because more startups are going to embed payments and banking services into their applications.

Products that will allow money to be moved freely while fitting the regulatory objectives in the industry will continue to grow. The Big Techs are going to come into the payment space. An example is Apple releasing payment acceptance on their iPhones to make it become a point of sales.

There's going to be a rise of business digital banking platforms who are focused on providing business banking solutions in the future.

Startup Scale Outlook for 2022 by Daniel Awe, Head of the Africa Fintech Foundry (AFF)

The rise of new Fintech Unicorns and more major mergers and acquisitions. Mobile money will gain rapid adoption due to regulatory impetus to support the sector.

Blockchain spending will be done by banks and this trend will take shape in the African landscape this year. More startups are going to create more use cases for blockchain.

Legal & Regulatory outlook for fintech 2022 by Yinka Edu (Partner Udo Udoma & Bello Osagie)

Regulation would become more solidified and focus would be on the digital lending practises. More partnerships, mergers and acquisitions would happen within the ecosystem.

What would likely not happen

There would not be a massive change in attitude and position by the government and regulatory agencies. However, this would not dissuade individuals from using it.

Although there's been a lot of anticipation towards the enactment of the startup bill into law, it's unlikely to happen this year. Open banking expansion to include pensions and insurance will take more time before it happens.

NGX/FMDQ trying to source funding for Fintechs will take longer than expected. It might happen late in the year or next year before the fruits start to germinate.

PAPSS: Fintechs trying to take advantage of this laudable initiative might have to rest easy because it won't happen as quickly as they'd hoped. Most African states who were signatories to the initiative are at different levels of preparedness for it.

Payments Outlook 2022 by Nkebet Mesele, Senior Director Products & Solutions, Visa

Embedded Finance. More merchants would embed payments and financial services would compliment their revenue. New banking as a service provider will help to create new use cases and revenue streams for both merchants and consumers who want to have a different way to grow their revenues.

Metaverse is creating a new shared space between different digital worlds. It's blending virtual and augmented reality. Startups in the ecosystem would start taking a position in this virtual economy and new sales platform for virtual goods and services.

Buy Now Pay Later has grown since the pandemic and it will continue in 2022 as it continues to offer secured credit to customers. Open banking with the APIs emerging in the country would bring in innovative solutions around data. Fintech startups  

Cybersecurity and Data privacy Outlook for 2022 by Dr. David Isiavwe (President, Information Security Society, Africa)

Organisations will continue to shift from a cyber-defensive posture to a stronger cyber-resilience position. Startups should be prepared to bounce back as soon as possible from cyber attacks. Boards of Directors will play an active role to ensure that their organisations have the right level of cyber resilience to withstand attacks from cyber threats.

Increased communication from Cybersecurity practitioners of the risk and mitigation strategies to business leaders. More regulatory focus and directions as fintechs will come under the scrutiny of regulators.

The new trajectory of interconnection and digitalisation witnessed in the past few years will receive further boost. More aggressive innovation is on the horizon and it will come with more attacks from threat actors.

Increased data protection and privacy laws. More data protection and privacy laws will come into play as the demands of customers for the protection of their data increase.

Increased data breach and extortion. As the use of technology increases there would be a commensurate increase in the attack surface leading to subsequent unauthorised access to customer data.

Due to an increase in online and phishing frauds, more products would be developed that come with biometric and behaviour analytics to fight fraud.