In February 2019, Piggybank announced a name change to “PiggyVest”, in line with its shift 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 later, the company behind one of the many unsecured online loan platforms in Nigeria, OneFi has secured a $ 5 million credit facility. It has been revealed that its flagship platform – Paylater – will become a full-service digital bank. Shortly thereafter, the company announced its start of payment acquisition, Amplify for an undisclosed amount.
For OneFi, the acquisition is a strategic move to kick off its transformation into a diverse digital financial services platform.
In recent years, companies like Paylater, Branch, Aella Credit, among others, have succeeded in disrupting the microcredit segment of the financial sector by giving people access to fast loans, even without warranty.
At present, these microcredit companies, as well as those offering savings services, are aggressively expanding their services, opting for both banking and non-banking services.
The CEO of OneFi, Chijioke Dozie told Techpoint in a phone conversation that recent steps the company has taken are aimed at ensuring that the platform meets its users’ other financial services needs. And with the recent funding, they will be able to extend loans to more traders, especially micro, small and medium enterprises.
Obviously, Paylater isn’t the only fintech to add other features to its offerings. Another industry player told Techpoint that everything is set for the launch of a few new products on its platform, in addition to its current micro-loan service.
Some of these startups add services that banks don’t offer, as well as services that they don’t offer effectively.
In a way, this opens up windows of opportunity for current and future fintech players.
The bank, a fintech relationship
Regardless of these fintech companies going after banks, there appears to be a symbiotic relationship between the two parties. Especially since the size of the fintech market is limited to the banked population.
Since the launch of the Bank Verification Number (BVN) in Nigeria, banks and other industry players have led to use BVN as a basis for identification.
This shows the importance of the banking system. These companies rely on the banking system for verification of their customers through the BVN and the banks also act as the intermediary through which loans are disbursed and repaid.
Past initiatives of some fintech startups tend towards a potential merger between them and banks in the future.
PiggyVest co-founder Joshua Chibueze told Techpoint last year that PiggyTech Global Limited – the parent company of PiggyVest – had acquired Gold Microfinance Bank under which the investment platform now operates as a subsidiary.
Also in 2018, Paylater collaborated with an approved microfinance bank to launch one of its recent products.
One of the forecasts for 2019 of Addedeji Olowe, administrator of Open Banking Nigeria, is that the cost of the interbank transfer would be reduced, with transactions under 1,000 becoming free.
Suggested reading: Payment banking services will collapse; 2019 financial forecast by a expert
As it stands, Olowe isn’t the only person to think in this direction. Dozie says that one possible effect of fintech activities in the country would be to reduce the cost of banking and financial services in general, especially for customers.
“The industry is going to be more competitive and dynamic,” he says.