In a year plagued by banking issues, fintech startups like Opay and PalmPay emerged as the clear winners of 2024, attracting clients with faster and more reliable payment solutions. While traditional banks grappled with weeks of network outages, mobile money transactions soared by 69.58 percent to N79.55 trillion from N46.91 trillion in 2023, according to the Nigeria Inter-Bank Settlement System (NIBSS).
Olusegun Alebiosu, CEO of First Bank, made this statement at the 6th First Bank Fintech Summit, “The future of banking is digital.”
Since 2020, these transactions have surged by 2,507.94 percent, with transaction volumes growing by 28.74 percent to 3.92 billion in 2024 from 3.04 billion in 2023, representing a 2,846.32 percent increase since 2020.
Overall electronic transactions skyrocketed to N1.09 quadrillion in 2024, with instant transfers dominating at N1.08 quadrillion, highlighting the crucial role of banks.
However, fintechs are rapidly gaining ground as customers seek alternatives. Opay and PalmPay have become the most popular alternatives, with both being the most downloaded finance apps by October 2023.
Nigeria has 17 companies licensed by the Central Bank of Nigeria (CBN) as mobile money operators (non-bank-led), but OPay and PalmPay stand out.
Chika Nwosu, PalmPay’s managing director, noted that the fintech, with 35 million customers, has over 16 million active monthly users and a 99.5 percent success rate on transfers.
Opay, with over 30 million users, attributed its success to IT investments, enabling rapid capacity expansion surpassing traditional banks’ capabilities. Adedeji Olowe, founder of Lendsqr, stated, “They made payment methods easier, faster, and better, and people began relying on them for everyday things.”
Some Nigerians turn to banks only when necessary. In October 2024, traditional banks’ system upgrades left many customers unable to access transfers. Temiloluwa Abdulrazak, a Lagos-based trader, downloaded PalmPay when her bank app wasn’t working.
Olamide Eniola, a civil engineer, opened an Opay account after being unable to access his salary for almost a week in 2023.
Lolade Akanji shared, “My GTBank app wasn’t working, which forced me to open an OPay account. I don’t want to go through that experience again.”
According to Bolaji Akinboro, chairman of Voriancorelli and co-founder of Cellulant, “Most Nigerians now have a wallet from Opay or another neobank.
When the banks went down, those with money in their wallets could conduct peer-to-peer transactions within the same ecosystem.”
Banks are aware that the 293.94 percent growth in electronic transactions since 2021 has strained their digital infrastructure.
The World Bank noted that Nigeria’s attempt to go cashless in late 2022/early 2023 failed due to inadequate digital infrastructure.
Olugbenga Agboola, CEO of Flutterwave, stated in an article, “Nigeria’s Budding Digital Economy: Coping with Disruptive Technology,” that Nigeria’s digital infrastructure is inefficient and costly.
In response, banks are investing in their digital infrastructure to prepare for a cashless economy. Five banks plan to invest N248.21 billion in technology upgrades this year.
Olowe of Lendsqr said, “The upgrades will improve banking capacity and cope with increased online banking demand.”
Comments are closed.