Connecting Africa is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

FinTech

Research Bites: Factors influencing fintech adoption in Nigeria

Article Image
— This article is part of a series in collaboration with the African Journal of Science, Technology, Innovation and Development.

The financial industry is facing a dynamic and systemic change in financial technology (fintech) innovation globally, and Africa is not left out. However, very little is known about the perception of end users regarding fintech in Africa.

There is a need for the financial industry to firstly comprehend the level of acceptance of consumers concerning technology adoption of financial services prior to the actual adoption of the technology.

It is equally important to know that any technology or innovation developed, but not properly adopted by the end users, is deemed to fail.

Since Nigeria is ranked as the largest economy in Africa and Lagos State is the commercial hub of Nigeria, there is need to estimate the nature of fintech services adopted by the banking customers and the factors influencing their intention to adopt fintech services.

A survey conducted among 467 end users in Lagos State between the last quarter of 2019 and first quarter of 2020 found that perceived usefulness; perceived ease of use; service trust; and social influence from family and friends have positive and significant impacts on users' attitude towards adopting fintech services in Nigeria.

The results indicate that there is a need for regulatory agency in the financial sector to further improve security and safety around the fintech services to further boost the confidence and trust of the end users.

Family, friends and community are also very significant in influencing the users' attitude and intention to adopt Fintech services. It is important for the general public to be sensitized on the importance of financial technology products and services which could be done by banks through various channels such as television, radio and social media.

Popular use cases

The information from the survey respondents showed the nature of fintech services that customers used in the last three years in the commercial hub of Nigeria.

The result reveals that money transfer payments of various forms constitute the largest proportion of the fintech services being used by the respondents (83.3%), followed by savings and investment (75.4%), insurance (71.9%), financial planning (63%), borrowing (60.6%) and others (43.3%).

This indicates that most of the sampled respondents are aware and make use of fintech services, and these could not be separated from the fact that many Nigerian youths are familiar with financial transactions online.

Industry disruptors

Fintech encompasses a number of innovative services which utilize evolving information technologies like cloud computing, Internet of Things (IoT) and big data to widen financial product and service platforms.

This led to companies outside the conventional banks starting fintech services to compete with banks. These companies use technology for diverse financial solutions such as lending, payments, borrowing and personal financial management among others.

These companies aim to entice customers with products and services that are more efficient, user-friendly, automated and transparent than those currently available in the traditional banking system.

Different types of innovations which currently dominate fintech comprise peer-to-peer lending, mobile payment systems, artificial intelligence and machine learning, digital advisory and trading systems, crypto currencies and the Blockchain and equity crowd funding.

Fintech offers different opportunities to users through improvement in transparency, reduction of costs, eradication of middlemen and easier accessibility to financial information.

Banking battle

The fast innovations in the fintech industry pose challenges for banks as they need to adapt to this new technological wave if they want to remain in business.

In order to remain competitive and continue to have a greater market share in the financial industry, banks have started investing in fintech and at the same time acquiring some fintech companies.

Although a reasonable amount of attention has been devoted to fintech in the financial industry, many people still doubt the continuous use of fintech especially in Africa, as the end users are clouded with skepticisms due to the considerable risks attached to it.

This poses a great challenge to the fintech companies to increase the potential benefits of fintech products as well as limit the potential risks.

Fostering alliance between the regulators, the incumbent banks and the fintech companies is essential to reduce the potential financial risks that could emanate in the industry.

The rate at which new ICT and innovation are diffused and adopted goes beyond the features of the technologies and innovation themselves, but also of equal importance are the features of the users to whom it is directed.

While few countries such as China, Australia, United Kingdom, Korea and Finland among others have adopted fintech at a wider level, the rate of adoption still remains at the preliminary stage in many emerging and developing countries.

Continuous innovative technology has been shaping the financial sector and this creates a prospect for the banks and fintech companies to find better alternatives in satisfying the consumers' needs and convenience.

— To read more about this research, you can access the full academic research paper from the African Journal of Science, Technology, Innovation and Development.

*Top image source: GSMA's 2021 State of the Industry Report on Mobile Money.

Yusuf Opeyemi Akinwale and Adam Konto Kyari

Innovation hub

Story

Connecting Africa Podcast: Ep. 3 – Startups, funding and failing fast with Zachariah George

This week the team chats to Startupbootcamp AfriTech Co-Founder Zachariah George about venture capital and angel investing in Africa and what he is looking for in the next generation of tech startups.

Story

Orange opens Digital Centers in Côte d’Ivoire and Cameroon

Orange has launched two new Digital Centers, one in Côte d'Ivoire and another in Cameroon, with plans to open more in Africa this year and into 2022.

More Innovation hub

Latest video

More videos

Guest Perspectives

Story

Omdia View: September 2021

By Omdia Analysts

This month's Omdia View covers Africell's Ugandan exit and MTC's Namibian stock exchange IPO; as well as Netflix's free Kenyan offering and a new broadband service in SA from Multichoice and MTN.

Story

Omdia View: August 2021

By Omdia Analysts

Omdia's analysts provide context and analysis about MTN's decision to exit Syria and not bid again for an Ethiopian license, as well as 5G news from Mauritius, Ghana, Mayotte and Reunion.

More Guest Perspectives

Partner perspectives

All Partner Perspectives

AfricaCom perspectives

Story

Digital inclusion as a catalyst for economic empowerment: Mastercard's Imelda Ngunzu

Mastercard's Imelda Ngunzu talks to Connecting Africa about how digital payment solutions and mobile money are transforming the lives of small business owners, women and marginalized groups in East Africa.

Story

Accelerating women in STEM: In conversation with GirlCode's Tinyiko Simbine

GirlCode co-founder and CFO Tinyiko Simbine talks about why it's important to help girls and young women excel in science, technology, engineering and mathematics (STEM) fields.

Story

How Poa Internet is unlocking meaningful connectivity in East Africa

Poa Internet's CEO Andy Halsall shares his views on what it takes to develop last-mile connectivity and get Africans online in a meaningful way.

More AfricaCom perspectives

Upcoming events

More Upcoming events

Flash poll

All polls

Upcoming webinars

Meeting SME’s where they are - Building inclusive ecosystems for Africa’s small business owners

Micro and small businesses have been, and still are, the spine and lifeblood of the African economy, making up 90% of businesses on the continent.

Many of these businesses have still been operating in traditional ways and serving non-digital customers. With Covid-19 expediting the digital transformation process, businesses - big and small - have been forced to adapt to operate successfully in a more digital-first environment.

To ensure that the digitalization of Africa’s market doesn’t leave micro and small businesses behind, digital solutions must be inclusive and create business-ready environments. But how can we ensure that African SMEs become digitally enabled?

In this webinar we will share from our own experience on how to create such an environment, and the actions we took in vcita to get there, including:

  • Closing the digital literacy gap through tech inclusion 
  • Making a positive impact on local communities
  • Building the foundations for digital inclusion and small business growth in a technology-accelerated world
  • Building the foundations for digital inclusion and small business growth in a technology-accelerated world

Register Here >>

More Webinars

Sponsored video

More videos

Like us on Facebook

Newsletter Sign Up


Sign Up