Nigerian big banks’ fintech foray spotlights valuation. A growing number of Nigerian big banks are making inroads into the financial technology space, putting the valuation of fintech firms in the country under the spotlight.
Around 2017, when fintech companies were seen as major disruptors in financial services, it was almost a given they will end the reign of the traditional banks. But the banks seem to have taken control of their future through strategic investments in fintech businesses.
Experts say the growing foray of the banks also threatens the valuation game of the fintech companies. Flutterwave, Interswitch, and OPay have over $1billion in valuations, making them part of the elite unicorn party. Those in payment services like OPay, Moniepoint and Paga are also consolidating their footprints in financial services, aided in part by the naira redesign policy, which saw millions of Nigerians flock to these platforms for the first time in the first quarter of the year to prevent becoming victims of the cash crunch that hit the country.
However, emphasis on high valuation is reducing as venture capitalists and private equity investors reevaluate their funding portfolios and take a more pragmatic approach in deciding who gets funding. This has caused a seismic shift in how fintech companies look at their operations. They are now prioritising their revenue generation strategy.
Unfortunately, this is where banks – which have had more years experimenting with different revenue strategies – see opportunity and are capitalising on it.
In May 2023, Stanbic IBTC Holdings, the holding company of Stanbic IBTC Bank, joined the ranks of banks launching a fintech business. Stanbic IBTC Financial Services Limited will function as a payment solutions provider, focusing on developing innovative technology solutions to enhance the holding company’s existing financial services offerings.
Stanbic is following in the footsteps of other financial institutions like Wema Bank, Guaranty Trust Holding Company (GTCO), and Access Holdings, both of which are pushing aggressively into fintech on the back of their startups ALAT, HabariPay, and Hydrogen Pay respectively. Although the banks’ startups are still in their infant stages, their ambitions are enormous.