In February 2019, Piggybank announced a change of name to ‘PiggyVest’, in line with its move from a savings product to a broader financial management platform. The reason for the change, according to the company, is to align its services with the needs of its customers.
Barely a month after, the company behind one of the many collateral-free online loan platforms in Nigeria, OneFi secured a $5 million debt facility. It was revealed that its flagship platform — Paylater — will become a full-service digital bank. Shortly afterwards, the company announced its acquisition of payments startup, Amplify for an undisclosed amount.
For OneFi, the acquisition is a strategic decision to kick off its transformation into a diverse digital financial service platform.
Over the past few years, the likes of Paylater, Branch, Aella Credit among others have successfully disrupted the micro-credit segment of the financial industry by giving people access to quick loans, even without collateral.
Right now, these micro-credit facility companies, as well as those offering savings, are aggressively expanding their services, going for both the banking and non-banking services.
The CEO of OneFi, Chijioke Dozie told Techpoint in a phone conversation that the company’s recent moves are to ensure that the platform caters for other financial services need of its users. And with the recent funding, they will be able to advance loans to more merchants especially micro, small and medium enterprises.
Evidently, Paylater is not the only fintech adding other features to its offerings. Another player in the industry revealed to Techpoint that everything is set for the launch of a couple of new products on its platform, in addition to its current micro-loan service.
Some of these startups are adding services that banks do not offer, as well as services they don’t offer efficiently.
This in a way opens up windows of opportunities for current and future players in the fintech space.
The bank, fintech relationship
Irrespective of the fact that these fintech companies are taking on the banks, there appears to be a symbiotic relationship between both parties. Especially considering that the market size of the fintechs is limited to the banked population.
Since the launch of the Bank Verification Number (BVN) registration exercise in Nigeria, the banks and other players in the industry have resulted in making use of BVN as the basis for identification.
This points out the importance of the banking system. These companies are relying on the banking system for the verification of their customers through the BVN and the banks are also serving as the medium through which the loans are being disbursed and repaid.
Past initiatives by some fintech startups tend towards a potential fusion between them and the banks in the future.
PiggyVest co-founder, Joshua Chibueze told Techpoint last year that PiggyTech Global Limited — the parent company of PiggyVest — acquired Gold Microfinance Bank under which the investment platform now operates as a subsidiary.
In 2018 as well, Paylater collaborated with a licensed micro-finance bank to launch one of its recent products.
One of the predictions for 2019 by Adedeji Olowe, a trustee of the Open Banking Nigeria, is that the cost of inter-bank transfer would be reduced, with transactions below ₦1,000 becoming free of charge.
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As it is, Olowe is not the only person thinking in that direction. Dozie affirms that a possible effect of the activities of fintechs in the country would be the reduction in the cost of banking and financial services in general, especially for the customers.
“The industry is going to be more competitive and dynamic,” he says.