Does the growing number of Fintechs in Nigeria mean deeper financial inclusion?
Nigeria is currently going through a significant shift in its financial sector, with major investments being made in Fintech. This innovative approach to financial services utilizes specialized software and algorithms to provide companies, business owners, and consumers with a means to better manage their financial operations; therefore presenting a competitive stance against traditional banks.
Fintech is gaining traction around the world. The number of Fintech startups in Nigeria is growing rapidly while the number of traditional banks remains constant. In 2021, Nigeria recorded 114 Fintech startups and only 21 commercial banks. While these numbers may reflect a demand for Fintech services and products, it is important to dive deeper into the topic and ask the consumers.
Our Kasi Insight - Banking in Nigeria - Brand Intelligence Survey, conducted in March of 2021, asked 480 respondents to reflect on their experiences with the services and products of various financial institutions. The study presented interesting findings on the awareness and perceptions of Fintech and traditional banking amongst respondents of varying demographics.
Upper/Middle Class & Active Individuals Currently Users of Fintech Services
Nigerians have many financial service providers at their disposal, and while they are familiar with their options, they may not always utilize the services and products of all of them. This is particularly true for Fintech in Nigeria; 47% of respondents have only seen or heard about their products, while only 31% of our respondents are currently using their products. This is a reminder that product awareness doesn't necessarily translate to product use. Awareness and familiarity are important to any new provider/service/product launch however, the numbers of users should pick up (the demand) to meet the supply (the number of Fintech).
Of the respondents who currently use Fintech products or services, 56% have a combined monthly household income between 501 USD to 900 USD, followed by 27% between 901 USD to 1,800 USD. From these respondents, around half (42%) are salaried employees while a third (33%) are self-employed or contractors. This demonstrates that the current users of Fintech services are from the upper/middle class and active individuals.
While Fintech is supposed to expand financial inclusion to the masses, it seems that it is not yet the case. Our research finds that upper/middle class and active individuals are the current users.
Traditional Banks Still Have a Wider Consumer Base in Nigeria
When it comes to traditional banks, our study shows that their usage is still higher. In fact, 33% of respondents have only seen or heard about their products, but 57% of our respondents are currently using their products. This is another reminder that product awareness doesn't necessarily translate to product use. For traditional banks, the awareness is lower but the utilization is high.
Of the respondents who currently use traditional banks' products or services, 36% have a combined monthly household income between 501 USD to 900 USD, followed by 30% with household income below 500 USD. From these respondents, more than half (56%) are salaried employees and 16% are self-employed or contractors.
While providers such as traditional banks, still have a larger consumer base, it would be wrong to assume that this will remain the case in the future. For Fintech, there is still work to be done to achieve a bigger consumer base and extend beyond the middle class. If traditional banks and Fintech are going after the same segments, the masses may not see the promise of Fintech in Nigeria.
As the competition hits up and with the future of banking at stake, it is vital for banks and Fintechs to continue to track consumer attitudes and perceptions towards financial service providers overtime to stay ahead of the curve of the trends and the possible shifts in this industry.
Our data intelligence platform can help you track the progress of financial providers across Nigeria and other countries in Africa, providing you with valuable insights that can help you or your business make data-driven decisions, fast.
Contact our team today to explore how our brand intelligence can empower your decision-making process. Win with confidence with Kasi insights https://www.kasiinsight.com/thehub
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