Fintech

Make it Real
November 12, 2018
Akinseinde Mercy
(Consulting & Research)
CAVIDEL Limited
Block B12, Flat 402
1004 Housing Estate
Victoria Island
Lagos
Tel: 08111106781
Email: ife.akinseinde@cavidel.com
Website: www.cavidel.com
Prospects and Challenges of Locally Developed Software
inThe Finance Sector of A Developing Economics
(Nigeria As A Case Study)
FinTech:

Make it Real
Outline
FINTECH
01
02
03
04
05
06
07
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09
10
TheConcept of FinTech
FinTech Ecosystem
Global FinTech Adoption, drivers
and Its Barriers
Emergence of FinTech Start-ups
The need for local software and
it’s benefits
Challenges and Growth Imperative For
Navigating the issues of local software
Growth drivers of FinTech startups and
consumer interest
Locally developed software in Nigeria
Preference of Foreign software over local
software
Future Impact of FinTech

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TheConcept
of
FinTech Trade by Barter
Cowries & manilas
Coins & Currency
notes
Coins & naira notes
Plastic cards &
Electronic money
Virtual Currency
(Cryptocurrency)
 Disruption works by literally
uprooting and changing how we
think, behave, do business, learn
and go about our daily activities.
 Disruptive innovation happens
whenever new technologies alters
the an existing market, industry, or
technology operates by producing
something new, more efficient and
worthwhile.
Disruptive Innovation
Source: https://www.vanguardngr.com/2012/10/nigerias-indigenous-currencies/
https://www.cbn.gov.ng/Currency/Oldnotes/before.asp
 FinTech or Financial Technology is
used to describe new technology that
seeks to improve and automate the
delivery and use of financial services.
 This includes digitizing processes that
were previously handled with paper
money and human interaction to
make them more efficient.
 FinTech is not just about digitizing
money, it’s about monetizing data.
It’s about how we can create and
capture the value-add from data,
previously limited by the technology
we had available.

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FinTech
Ecosystem
Users
B2B for banks
and their
business clients
B2C for SMEsConsumers
06
01
02
03
04
05
StreamlineWealth Management
Lending and Borrowing
Retail Banking
MoneyTransfers and Payments
Investment Management
Fundraising,Credit application
Insurance07
FinTechActivities

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Users
Financial
Institutions
Start-ups
Universities
& Research
Institutions
Government
&
Regulators
Incubators,
accelerators,
innovation
labs, Investors
Tech
Vendors
The FinTech Ecosystem Pillars
Source: KPMG: Fintech in Nigeria https://assets.kpmg.com/content/dam/kpmg/ng/pdf/ng-fintech-in-nigeria-understanding-the-value-proposition.pdf
PricewaterhouseCoopers (PwC) Nigeria FinTech Survey 2017 Report https://www.pwc.com/ng/en/pdf/nigeria-fintech-report-2017.pdf
Consumers and
users from
corporate to
rental customers
are considering
leveraging
FinTech to
improve their
services.
They support the
FinTech
community by
mentoring and
assisting early
stage companies
and producing a
more talented
workforce with an
entrepreneurial
mind.
The infrastructure
players that protect
consumers through
appropriate rules,
create an enabling
environment and
are to provide
supportive
incentive to help
FinTech thrive.
They are offering means
for big businesses to
engage and assist young
companies meet their
potential by providing the
necessary support to spur
growth and attract
investors.
Angels, Venture
Capitalists (VCs), are
looking at FinTech as a
viable investment.
Technology
Vendors are
exploring ways to
embed FinTech
solutions in their
solution stack.
Banks and other
financial
institutions are
currently
determining
suitable approach
to engage FinTech
companies and
leverage their
innovation
Tech companies
enabling many
elements of
traditional financial
services through
emerging
technologies and
tools.
A Collaborative Network

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Global
FinTech
Adoption
Average FinTech adoption as at 2017
33%
46
50
64
13%
%
%
%
Average FinTech adoption across
emerging markets: Brazil, China, India,
Mexico and South Africa
Consumers use FinTech for money
transfer and payment services and
more intend doing in the future
Average FinTech adoption across
emerging markets: Brazil, China, India,
Mexico and South Africa
Consumers are regular users of five or
more FinTech services
Source: EY Fintech Adoption Index 2017 https://www.ey.com/Publication/vwLUAssets/ey-
fintech-adoption-index-2017/$FILE/ey-fintech-adoption-index-2017.pdf
 The world is becoming a
global digital community
characterized by a rapid
growth in the adoption of
digital technologies.
 Adoption in FinTech is
growing globally.
 Like the rest of the world
Nigeria is also rapidly evolving
into a digital community
creating remarkable growth
opportunities for eagle-eyed
businesses.
 Global adoption increases with
the growing awareness of
FinTech and it’s impact.
 With the rate at which new
technologies including the
penetration of smartphones
are disrupting the finance
sector, it is safe to say that
FinTech adoption will continue
to gain more momentum
 According to EY's 2017
Fintech Adoption Index, 33%
of consumers utilize at least
two or more FinTech services
and 84% of customers are
increasingly aware of
FinTech.

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Drivers
of
FinTechAdoption
1
2
3
4
5
6
7
8
User-friendly
Ease of process
Features – Access to
different products &
services 24/7)
Responsive - Speed Affordability
Flexibility Platform Variety
(Digital channels &
technologies)
Convenience
9
Better quality
of service
Customers’ Need
Technology

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Barriers to FinTech
Adoption
Preference for traditional financial services
providers among some young consumers
and older ones aged 45 years and above who
lack the sufficient compelling reason to
switch
Lack of need and not perceiving the
advantage. Inadequate understanding of the
relatively new concept
Security of customer data
Lack of authentic customer
information on digital media and
poor technology
Lack of awareness, financial
literacy and uncertainty
1
2
3
4
5
Roadblocks in
the wide spread
of adoption in
Nigeria

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The Emergence
of
FinTechStart-ups
Innovation
Ideas
Execution
Adoption
Key Strengths of FinTech Start-ups
 The focus on customers need and the application of
technology is fueling the disruption in the finance
space.
 The primary advantages FinTech startups possess are
an innovation mindset, agility (speed to adjust),
consumer-centric perspective, and an infrastructure
built for digital.
 New FinTech firms, business models and consumer
propositions entering the market, including entrepreneurial
start-ups, major technology firms, and branchless mobile
banking services are driving change and innovation in the
finance sector.
 They are designed to be a threat to, challenge, and
eventually takeover entrenched traditional financial
services providers by being more agile, serving an
underserved segment or providing faster and better service.
 Keeping apace of FinTech-inspired innovations requires a
significant change in thinking, processes, decision-making,
and even overall corporate structure.

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Growth Drivers
of
FinTechStartups
Drivers
Funding Ecosystem: Low setup costs and
plentiful funding makes FinTech a fertile area for
startups.
Technology Readiness:
Availability of the tools and
technology
Customer oriented
Business Models:
Building new pathways
to successful business
models.
Talent Acquisition: A strong talent
pipeline of inexpensive and easy to hire
workforce with an entrepreneurial and
innovative mindset
Greater collaboration between
market participants to leverage
and cross-pollinate learnings and
entrepreneurial experiences
Business
Environment
Government incentives
and regulatory support.

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Locally DevelopedSoftwarein Nigeria
Services Start-ups/Software
 ALAT by Wema Bank
 Leo by UBA
 737 by GTBank
Access top notch financial services without
stepping into the bank.
Categories
 Online payments for businesses
 Online foreign exchange
 Pay via cryptocurrency
 Online digital-only banks without branches
 Nonbanks for transfer
 Mobile payment at checkout
 Paystack
 Amplify
 SimplePay
 Quickteller
 Interswitch
 Flutterwave
 Wallet.ng
 NairaEx - crypto
 Paga (money
sender in remote
areas)
 Micro-lending platform – Online short term
platforms.
 Quick access to loans for businesses and
personal need.
 Borrowing using P2Pplatforms
 TIMS
 Branch
 Fint.ng
 Kudi money
 PayLater
 Lidya
 QuickCheck
 Kiakia
 Zedvance
 RenMoney
 PiggyBank
 Cowerywise
 KoloPay
 TradeFi
 Invest.ng
 P2P platforms for high interest
investments
 Investments in equity, crowdfunding
platforms and gives rewards.
 Online investment advice and
management using financial algorithm
 Online stockbroking
 Online budgeting and financial planning
tools
 Simple way to track finances in real time
 Insurance
 Accounteer
 Invoice NG
 Kliqr
 Reach
 Budgit (Manages financial data for
transparency)
Financial Management
(Savings and investments)
Money transfers and
payments
Borrowing and Lending
Banking
Financial Planning

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Preference
of
ForeignSoftware
over
LocalSoftware
Not User-friendlyDependability
Low standards
Business angle
needs to
improve
Wrong mindset
Difficult to
understand
Poor patronage
01
02
03
04
05
06
07
Some developers lack the
insight to abide to the rule
that it is not always how
good the software is that
matters but how it can easily
be understood and used.
Local software
don’t keep to
global standards
in terms of
quality.
Over
dependence on
foreign software
based on trust in
their system &
experiences
with local
fraudulent
companies.
Lack of value & respect
for local products from
Nigerian companies.
This results to poor
patronage of locally
developed software.
The perception that white people
are more superior and smarter.
This perception needs to be
changed. We have great minds in
Nigeria and we (FinTech Startups)
are building world class products.
Local software
are not user-
friendly as the
graphical user
interface are not
there or very
poor.
Local software developers
need to improve on their
products. They are yet to
realize that software is both
processes, research and
business. They lack
commitment to the business
angle of software
development.

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Challenges
of
Locally Developed
Software
(Cont’d)
Regulatory Systems
• Obsolete legislation
•Lack of clarity in the regulatory environment as FinTechs strive to define compliance
model.
• So many licenses required for entrepreneurs to participate in the payments space e.g.
getting approval for a USSD code takes too long.
•Unanswered Questions regarding the regulatory system that governs FinTech.
Collaboration, Partnership
& Funding
•Getting key partners like banks and other institutions on board when you are basically an
unknown company/ entrepreneur can be very difficult.
•Most FinTech verticals require some significant startup cost which remains quite difficult
to come by. It is relatively easier to get initial seed funding than getting scale funding.
Winning Customer belief and
trust
•Users are untrusting and always use products in different ways than one previously
imagined.
• Nigerians are skeptical when it comes to their money.
Financial Infrastructure
•Access to infrastructure in general (including financial infrastructure) remains a challenge
and where it exists startups find it difficult to access it. They have not benefited from it as
they should.
•Founders don’t really understand how it works or even about its existence
Driving Adoption •Barriers to adoption makes it difficult for software usage.
Risk Management
•Fear of cyber attacks and fraudulent activities makes customer data security and privacy
crucial.

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Challenges
of
Locally Developed
Software
(Cont’d)
Documentation •Poor documentation of locally developed software.
Mortality Rate
•Mortality rate of local solutions is very high because local software developers lack the
encouragement, funds, necessary support to continue, and so they struggle to scale
profitably on their own.
Policy Implementation
•Local content law policy are not been implemented by the appropriate government
regulatory agency that protects software development and acquisition in Nigeria. Lack of
attention is given to the issue of developing and building local products
•Changes in policies that catches business off guard affects FinTech start-ps.
Marketing
•Slow progress in getting audience since attention is not given to start-ups at a lot of
places
Management & Culture
•Differences in management culture, operational processes and business models when
dealing with Financial Institutions.
Access to Talent
•We do not have enough skilled people that understand the FinTech business of developing
quality solutions.
•Inadequate talent with the right domain experience. The sector needs more experienced
people, specifically middle managers from financial institutions to build FinTech startups.

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Banks are Evolving
Source: https://www.tekedia.com/the-challenge-before-fintechs-as-nigerian-banks-evolve/
Value
Nigerian Banks
Origination
& Creation
Innovation &
AggregationPoor delivery
Nigerian Banks
Smart Delivery
Innovation &
Aggregation
Origination &
Creation
 The banking sector which is the most dynamic and
competitive sector in the economy is evolving.
 Fintech is driving the total redesign in the banking
sector.
 Banks are now repositioning themselves,
participating in origination & creation, working on
innovation and building capabilities across
different elements.
 There is no Fintech that will thrive in Nigeria
that would not be paying “taxes” to the
banks. The banks are declaring profits,
utilizing the agility, innovation and technical
expertise of FinTech firms.
 Banks are evolving and that is a challenge
for FinTechs because if they become very
increasingly innovative and have the
capacity, the banks may even decide to cut
the startups off since they own their license
from CBN.
Value
Previously
Presently

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Growth Imperative
For
Navigatingthe Issuesof
LocalSoftware
Collaboration
Collaboration and knowledge sharing is important. It is always helpful to talk to those who came
before you, they always have insight regarding easy things you can avoid.
Collaboration can increase revenues, generate new business and enhance the consumer experience.
Gaining Users
They require strategic partnerships with established players to help startups to get access to
customer acquisition , distribution and in turn reduce spend on customer acquisition.
Startups can leverage the reputation of the established players to build trust and confidence among
customers.
Partnership & Funding
Banks and FinTechs can collaborate to leverage their competencies. Banks can benefit by utilizing
the FinTech firm’s agility, innovation and technical expertise. Fintech firms will get the bank’s
advantage of scale, stability, trust and access to capital and funding.

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Growth Imperative
For
Navigatingthe Issuesof
LocalSoftware
(Cont’d)
Regulatory System
There must be a deliberate drive to develop appropriate regulatory frameworks and government
incentives for the sector.
FinTech startups need to stay updated with the latest changes in policy by the CBN, NDIC and other
relevant authorities to avoid being caught unawares by changing policy.
Patronage & Documentation
We should imbibe the culture of supporting local brand and strive to scale operations sustainably.
Documentation of FinTech software should be very intuitive and flexible.
Partnership & Funding
Banks and FinTechs can collaborate to leverage their competencies. Banks can benefit by utilizing
the FinTech firm’s agility, innovation and technical expertise. Fintech firms will get the bank’s
advantage of scale, stability, trust and access to capital and funding.

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The Need
for
Locally Developed
Software
Build human
capacity
Cost reduction
Meet SMEs
needs and
growth
Address global
financial issues
Employment
creation
Block financial
leakages, promote
accountability and
transparency
The locally
developed software
addresses more of
indigenous
challenges
Locally developed
software adapts
better to local
situations
Enhance rapid
change, promote
agility & speed to
financial market in
Nigeria
Increase financial &
digital literacy,
entrepreneurial &
innovative thinking
skills
Increase response
time of technical
support
Economic growth
through
diversification

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The Benefits
of
FinTech
They limit the need
for human
investment
managers, thereby
reducing the cost of
managing a
portfolio.
Growth for
alternative lenders.
Better Money Management
Financial Inclusion
Process Efficiency
Online payments through
mobile phone or tablets
improves process efficiency,
convenience of trade, saves
time in money movement and
customer experience
The underserved or
unserved have access to
quick and affordable
banking operations via
mobile phone.
Unbanked/Underbanked
Better Money Management
Allows for better cash
flow management,
forecasting and improved
working capital
management
Financial Inclusion
Drives financial inclusion
services for customers. It
allows to better understand
and assess customers’ needs
and make more personalized
services.
They reduce the cost of
managing a portfolio. It
enhances loan portfolio
diversification and extend
financial advice to a wider
cross section of people.
Robo -Advisors
Greater Participation
It provides a more level
playing field that allows retail
investors to have greater
participation in the market.
FinTech intermediaries help
bring additional liquidity to
the market.
Performance Enhancement
Fintech improves the health
of traditional financial
institutions by enhancing
performance and improving
profitability.
Cost Reduction
It removes the barriers and
lowers the costs for customers,
by removing the need for
intermediaries that charge
high fees, which is then very
costly for the customers
Data enrichment
Fintech data can provide
financial institutions a keener
insight into what their
customers are doing with
their money.

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 Online banking for all financial institutions to
support greater audit capability, transparency in
payments systems and security in transactions.
 Internet finance, which will be led by outsiders.
 Game changing technologies such as Blockchain,
AI and digital currencies (crypto) to be prominent
in generating new value streams in the financial
industry.
 The social economic lives of people would be
changed.
 Consumers will continue to drive demand and
shape supply.
 Industry convergence and collaboration will
become unavoidable, leading to the leap of
customer engagement and servicing.
 Aligning with customer goals, maintaining trust,
and delivering digital, agile and efficient processes
 In the investment landscape, opportunities will
continue to remain strong in emerging markets
where there is a large population of unbanked or
underserved consumers, supported by
automation and connectivity across platforms.
 There will be the need for FinTech startups to
think about scaling up quickly to support their
growing customer bases, through sustainability of
their business models and looking beyond just
FinTech collaboration.
 The future of the banking industry will depend on
its ability to leverage the power of customer
insight, advanced analytics and digital technology
to provide services that help today’s tech-savvy
customers manage their finances and better
manage their daily lives.
Source: https://www.forbes.com/sites/jimmarous/2018/08/27/future-of-banking-fintech-or-techfin-technology/#39f36a5b5f2d
Future Impact

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The End
21
Thank You
for listening

Fintech

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