Nigeria's fintech space has been an innovation hotbed for much of the past two decades.
As recently as 2000, automated teller machines were virtually unheard of in the country, and people had to queue for hours to withdraw money. Similarly, electronic payments were non-existent, but all that has changed.
Interswitch made it easier for Nigerians to access cash before providing payment gateways and card services.
More recently, Paystack and Flutterwave have simplified things for businesses, allowing them to accept online payments, often in less than five minutes.
Much of this development has been driven by upstarts and not the country's traditional financial institutions, but the success of these fintechs has caused them to sit up and take notice.
WEMA Bank made the first move when it launched ALAT in 2015 and now has over a million customers. For comparison, Kuda has seven million customers, according to a recent statement by its CEO.
Until 2011, Nigerian banks could not compete in the fintech space as most of the activities in the space were non-banking-related. However, new CBN guidelines allowing for the creation of a holding company structure have given impetus to their fintech ambitions.
Guaranty Trust Holding Company and Access Corporation are two institutions that have taken advantage of these rules to set up fintechs.
Techpoint Africa sat down with Kemi Okusanya, CEO of Hydrogen, a fintech under the Access Corporation. She shared its vision for the payment industry, the benefits of being a part of the Access Corporation, and the missing component in fintech partnership conversations.
Don't miss out on Africa's financial revolution
From oil and gas to payments
Okusanya is a rare sight for a fintech executive in Nigeria. For starters, she's worked in financial services longer than most fintechs operating in the country.
Although she started her career in the oil and gas sector, she tells me that her journey into financial services began as an eight-year-old shadowing her mother.
Incidentally, she spent less than 18 months at ExxonMobil before moving to Zenith Bank, where she held roles in customer service and business development.
In 2010, she ended a 10-year association with Zenith Bank and joined MoneyGram as a business development manager.
At MoneyGram, she was at different times regional manager and regional director for the company's business in Anglophone West Africa and her last position saw her head MoneyGram's business in Anglophone West Africa.
She also spent nearly five years at Visa, where she worked with fintechs and banks in her capacity as Vice President, West Africa. Now at Hydrogen, she brings her experience across banking, remittance, and payment to the role.
"It's exciting because I've always been on the B2B side, telling the partners what to do; now I'm doing it. Most businesses will just bring the practicality of it, but I also understand the theory. And so it's that fusion between both that makes it unique"
One more payment fintech?
That article was inspired by a series of then tweets questioning why every Nigerian startup founder seemed to be building a fintech, so one of my questions tried to understand Hydrogen's.
Okusanya is attracted to the Hydrogen vision and believes more can be done despite the immense achievements in the fintech space.
"Could there be a day where you can be sure that your card will never fail? Could there be a day that a payment could be made and it would never fail? It's possible. It happens in the developed world. In fact, if you travel with your card, you realise that you never have those experiences. So for us, and for me particularly, it's about how we can take Nigeria and Africa to that level."
Improving the reliability of payment infrastructure has proven to be a game changer in Nigeria's fintech space. After the country's central bank announced that it was redesigning the naira, the country was hit with a cash crunch that accelerated the adoption of digital payments in most parts of the country.
While many fintech startups benefitted from the spike in digital payments, the two biggest winners — OPay and PalmPay — were buoyed by their speedy payment services.
To achieve this goal, Hydrogen aims to reduce the number of touchpoints required to process payments.
It's also working on using the data generated while processing payments to provide advisory services to its business clients and facilitate the delivery of other financial services.
Pros and cons of being part of the Access Corporation
Despite being part of the Access Corporation, Okusanya emphasises that Hydrogen enjoys no special privileges, adding that the group is set up to allow the different entities to operate independently.
"One of the things that Access Corporation has done fantastically well is build various companies within that ecosystem, and each one is independent. What that does is that inasmuch as there's an ecosystem, there is that individualistic piece that ensures that when I sit down with another company within the ecosystem, it's more of having an objective view to ask, 'Is there a business opportunity here or not?'"
Having one partner with whom it could test its systems in the initial stages meant it was not exactly starting from scratch.
Still, the inability of most people to distinguish the businesses under the Access Corporation forces the Hydrogen team to tread carefully.
"It puts me on my toes to ensure that we are running the business in a way that there's a lot of responsibility, there's a lot of focus, and there's a lot of excellence that we're bringing in so that I don't create a ripple effect on the other verticals within the Corporation."
Balancing profit and speed
As venture capital funding has dried up in recent years, there has been a growing focus on profitability, upending a system that prioritised speedy growth for so many years.
Fintechs have borne the brunt of most of these warnings, with Okusanya suggesting that a significant factor contributing to the lack of profit growth is that while many fintech executives excel at scaling, they struggle with the business aspect.
Despite being a relatively young company, Hydrogen has an eye on profitability. It is laser-focused on ensuring its margins are sustainable, not just for the company but for its merchants.
It has also spent much of its first year of operation building a foundation that Okusanya believes will ensure its longevity.
"It's about the people. You can have all the great strategies. You can have great processes and great tech. If the team is not cohesive, if the team is not focused, if the team does not understand the vision, then that's where you have the problem."
The success of any business largely rests on its employees; Hydrogen is no different. Okusanya emphasises the importance of the team in helping the fintech achieve its goals.
Drawing on over a decade of experience in team building and management, Okusanya has established a framework that maximises employee potential within the fintech.
A key strategy she employs is implementing a consistent communication schedule, combined with a clear explanation of the necessity behind the established structures, ensuring employee comprehension and buy-in.
"If somebody understands why they're doing what they're doing, they'll probably resist less."
With over 200 full-time and part-time employees, Hydrogen encourages a strong team spirit, ensuring that all employees row in the same direction.
The missing piece in fintech collaboration
In March 2023, Semafor reported that some Nigerian fintech startups were working on a fraud registry codenamed Project Radar. More recently, TechCabal reported that some banks and fintechs were working on a framework to fight fraud in the country.
Fraud is a natural fallout of digitising the financial system, and globally, banks reportedly lost $442 billion to payment, card, and cheque fraud in 2023. Closer home, Nigerian banks lost ₦9.5 billion to e-fraud as of August 2023.
Despite fraud posing a significant challenge to financial institutions in Nigeria, attempts at creating a solution have often failed, with many stakeholders pointing out that only a few people are willing to do the necessary work.
However, Okusanya believes that the missing piece in these talks is mutual trust and fear of the competition.
"When you're getting into a partnership, you have to put everything on the table. Both parties must state where they intend to play and identify where there could be an overlap, and we decide from the very beginning if we're going to compete there or if somebody is going to have to let it go for the other. That's how partnerships work."
Companies within the Access Corporation have made many acquisitions in the past few years, but Okusanya believes that is not an immediate priority for the fintech. Instead, it plans to deepen its footprints across Africa.
"We want to make sure that one out of every three transactions in Africa has something to do with us."