A few days after the launch of its fintech unit called SquadCo, Guaranty Trust Holding Company (GTCO), has got final approval from the Central Bank of Nigeria (CBN) for its payments unit HabariPay Limited.
The bank, which recently transited to a holding company, is focusing on fintech to tap from Nigeria’s underserved market. The CBN’s approval for HabariPay means one of the largest financial institutions in the country is joining forces with players in the fintech space to deepen financial inclusion in the country.
HabariPay offers a range of financial services augmented by other units of GTCO. This is seen as a major boost to the push to curtail the teeming number of about 40 million unbanked and underserved people in Nigeria, giving GTCO’s branches scattered across the country.
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“Payments are central to the development of financial services globally and represent a key growth area for the group,” said CEO Segun Agbaje.
“With HabariPay, we have successfully created another pathway towards enhancing the service experience for our customers and creating more value for our stakeholders.”
Nigeria is experiencing a boom in the emerging fintech market that has been increasingly attracting billions of dollars in investment. As the boom results in threat to traditional financial institutions, banks are jumping the fintech train. Besides GTCO, Access Bank is another traditional institution in Nigeria that has gone holdco while Sterling Bank is towing the same path.
GTCO’s determination to diversify its financial operation is also seen in its recent purchase of Investment One Funds Management Limited and Investment One Pension Managers Limited made in February. However, the company’s focus remains on financial technology.
“Our vision is an Africa where every payment is digital, and we hope to achieve this by increasingly leveraging technology to improve access to financial services for individuals and empower businesses across Africa with the right digital tools to thrive,” Mr Agbaje said.
Is Nigeria’s digital payment space getting saturated?
Despite the financial inclusion gap, there is concern that there are becoming too many digital payment companies in Nigeria. Recently, major telecom companies in Nigeria, Airtel and MTN, were given licenses to operate payment service banks (PSB), a development believed to be the ultimate boost to the push for financial inclusion.
The telcos’ delve into financial services is in addition to hundreds of fintech startups in Nigeria, headed by Flutterwave, that are trying to solve the same problem.
However, compared to countries where there is financial inclusion, Nigeria’s digital payment market is still untapped given its population. For instance, in the United States, there are 8,775 fintech startups for its 334.6 million people while the United Kingdom has 1,600 fintech startups serving its 68.5 million population. India, a country with a financial inclusion gap similar to Nigeria, has 6,636 fintech startups for its 1.4 billion population. Likewise, Brazil has 1,446 fintech startups for its 215 million people.
Nigeria is said to have about 200 fintech startups, serving its more than 200 million population. This leaves about one million people to the service of one fintech, meaning that Nigeria needs more than a thousand fintech startups to bridge the gap.