Lately, I’ve taken an interest in playing chess. Chess is a high-concentration game that requires you to not only think about what the most optimal move to make is, but to also predict what your opponent’s next move will be, and to preempt what your response to that move will be. You also need to be actively studying the board in real time to identify where opportunities are opening up for you to play certain moves while concurrently moving pieces around the board to hinder any strategy you sense your opponent is trying to build up.

I played with a colleague of mine some months back (who has a 1200 points rating on chess.com and is related to a chess grandmaster) and he did me dirty. Needless to say, I have now unlocked a new dimension of pettiness, and I have temporarily updated my goal in life to “Get better at Chess” so I don’t just beat him, but embarrass him (by capturing all his officials, promoting one or two Pawns to Queens, and chasing his King around the chessboard like a deranged ping-pong ball before I eventually checkmate him).

As much as they seem like two different fields, I think a deep understanding of chess and its fundamentals can help with clarity into how to develop a fintech strategy for your business. I believe there are parallels between the game of chess and the fintech industry. This article is my attempt to outline those parallels and share my perspective on them.

11 Fintech Lessons from Chess

1. Everyone does what is in their best interest.

One of the most hysterical things that happens to me in a chess match is playing an accidental move that gives my opponent an advantage. This may include accidentally placing my Queen in a Knight’s line of attack or placing my Bishop in a precarious position that gives a pawn the opportunity to take it. In cases like this I always pray (and hope) my opponent doesn’t take advantage of my mistake, 9 out of 10 times they do, the only time they don’t is when they do not see it.

All customers will do what is in their best interest, and the only reason a customer will actually use your product is if they feel it is in their best interest to leave what they already use to solve their problem to use your solution. If you have to repetitively convince customers to use and actually stay with your product, that is generally a sign that your value proposition isn’t clear or something about your product promise is going undelivered. Churn is an indicator that your customers do not think that regularly using your product is in their best interest. People will not use your product because YOU think it’s great, people will only use your product if they feel it solves a real problem for them and it actually makes their lives better.

Pricing is also a key component of a product’s value proposition. Digital payments have a very clear value proposition, but if it costs N1,500 (US$1.07) to do a transfer of 10,000 (US$7.14) to someone, using your product is probably no longer in the best interest of the majority of users and they may start shopping for alternatives even though your solution clearly solves their problem.

If they do not think your product is in their best interest, they will not come, and even if they do come (because of your marketing prowess), they will not stay. The quality of your product and its ability to solve the problem it was designed for is a paramount indicator of whether you will have a successful business or not (that and whether you’re charging right).

2. Do Not Invest Your energy into capturing Pawns.

The easiest piece to take in a chess game is a Pawn. It’s very common for people to sacrifice their Pawns in a chess game to get out of tight situations, and it is very unlikely people will defend their Pawns unless they are a key part of a build-up strategy they are putting together. Pawns are generally low-value pieces, and it is in your best interest to focus on capturing more salient pieces that can significantly dismantle your opponent’s strategy than less consequential ones.

It’s very common for people building within the fintech space to pick market opportunities that aren’t consequential, large, or have the capacity to expand significantly to build out products for those verticals in a bid to capture market share. In some cases, those markets may already be matured markets where consumer education isn’t required and your objective is to collect a piece of the pie, in others, these are nascent markets that may become big markets in the future, either way, it is in your best interest to actually sit down and model what that market will look like in the future based on the most acceptable pricing model you can adopt today. This will give you a clear picture of what you will need to do to hit US$ 1 million (N1.4Billion) in annual recurring revenue and will help you understand whether the market you’re in is elastic enough to support your product vision, or whether you’re wasting your time building for a market that cannot and will not expand. Understanding this discrepancy is of utmost importance.

3. A Pawn today may become a Queen tomorrow

In the rare event that a Pawn is able to cross to the other side of the board, that Pawn can be upgraded to an official (which in the overwhelming majority of cases is a Queen). It is hard to predict which of your 8 Pawns will eventually become a Queen by the end of the match (or if any will be), but if that were to happen, that gives you a massive advantage you can begin to leverage to apply pressure on your opponent.

There are markets that look inconsequential today that may become massive opportunities tomorrow. As of November 2015 when Paystack joined YCombinator, they had only US$1,400 in revenue, and the market for online acquiring didn’t look as large as it is today, but the existence of an easy-to-implement and use gateway drove more developers to adopt it and more companies to explore eCommerce which essentially unlocked consumption within that market.

PiggyVest today has 4.5 million users. If you told me eight years ago (when people were still trying to get a hang of this digital payment thingy) that a savings app without a clearly identifiable office would have that much in user count and be paying out roughly N200 billion (US$142.8million) per year in saving obligations, I’d find that hard to believe. We rarely ever know which market opportunities are going to expand significantly, and finding the right vertical seems more like a gamble than anything else, but identifying the Pawn that will eventually become a Queen is a powerful long-term strategy than can either create high-outsized outcomes for those who make the right bet (Paystack, PiggyVest, Moniepoint) or be another startup failure story for those who don’t (Marketforce, Thepeer).

4. You may be one mistake away from destroying your entire business

In most chess games, the minute an opponent takes your Queen, you’re probably just a couple of moves away from losing the entire game. For the vast majority of players, their Queen is central to their strategy, and losing their Queen in addition to having an opponent with an aggressive one is a recipe for disaster. Aside from losing a Queen, I’ve played a chess match where my opponent had two Knights, one Bishop, and his Queen at my end of the board applying pressure on my King, however, my opponent made the costly mistake of carelessly placing his Bishop in my Castle’s line of attack, and that was where the game went south for him. I took their Bishop, and in less than 15 moves I had taken all his officials excluding his Queen and King, while I ended up having two Castles, one Queen, and one Bishop (plus a couple of Pawns) in the game.

Regardless of how solid your strategy is, one mistake is enough to sink your entire business and take it to zero. Patricia, Union54, and Pivo are all good examples of how one mistake – a hack on customers’ deposits (Patricia), a concerted chargeback fraud scheme (Union54), and cofounder conflicts (Pivo) are enough to sink a rising ship and must be avoided at all costs. Building fraud-resilient systems, embracing corporate governance, and staying compliant are not necessarily the most attractive things for a startup trying to move fast and break things to focus on early on, but they help players protect themselves from ungodly individuals (see fraudsters), weather the storm in times of turbulence, and remain compliant with extant regulations to avoid raising capital for an esoteric initiative that doesn’t see the light of day because of regulation.

5. When you’re ahead avoid overconfidence.

As a follow-up to my previous point, losing your Queen in a chess match is a very daunting experience, however, it does carry one significant advantage – 8 out of 10 times, your opponent will become overconfident, and that creates an opportunity for you to capitalize on. I’ve won chess matches where I initially lost my Queen, and my opponent became so overconfident, that he didn’t notice when I sneaked a Castle into a delicate position and delivered a checkmate.

Every market leader gets disrupted by overconfidence. Simply put, when you’re ahead of the market; you have a product with a dominant market share, you have unique infrastructure that gives you a leg-up over competitors or you have a deep distribution moat, it’s easy to become lackadaisical and ignore competitors (mostly startups) because you think they can’t take you out. The one thing you must not forget, however, is that the minute the gap in quality between you and your competitor’s product becomes significant, you’re one move away from being dethroned and playing catch up. Worse still is when your competitor disrupts you gradually over a long period of time, and by the time you begin to notice what’s happening, you’ve not only been dethroned, you’ve already been chased out of the palace.

Interswitch, one of the leading fintech players in Africa (and one of the largest by revenue) was the undisputed market leader in payment gateways for a very long time, but overconfidence (in my opinion) created room for upstarts like Paystack and Flutterwave to redesign the payment gateway business model at the time and create a much better product that allowed them to capture market share and subsequently expand that market. The banks are also a good example of this – their overconfidence in retail banKing created a massive opening for fintechs like OPay, Kuda PiggyVest, and the like to capture huge markets from them and (somewhat) disrupt them in payments, deposits and savings. It is important that as you become big, you remain cautious at the same time.

6. The quicker you are able to deploy, the better.

Every player in a chess match starts with 16 pieces – 8 Pawns and 8 officials, but because the Pawns sit at the front row and the officials at the back, it is too common for a game to be midway in and a player hasn’t been able to deploy most of his officials thereby giving his opponent with more deployed officials what looks like a numeric advantage over him.

Culture is the most important component of building a business, and in a fast-moving industry like fintech, a culture that prevents you from iterating fast, trying out new things, interacting with customer feedback, and responding to them in real-time, is probably going to significantly weaken your prospects for success. You have to be able to try new things find out if they work and double down on winners as quickly as possible. In other words, the more flexible you are, the more likely you are to find winning bets and leverage them for growth and expansion. Your lack of nimbleness and your inability to be act fast is a huge disadvantage when competing with people who are doing so.

7. You must be willing to make tradeoffs if you’re going to prosper

There are pieces every chess player is unwilling to give up easily during a match. For instance, most players are unwilling to lose their Queens and will sacrifice any official to make sure their Queen is safe. For some, it’s their Knights. Knights are very powerful short-range pieces that I don’t particularly like. The issue with Knights for me is that understanding how best to play them in a game to leverage their lethal ability to set up a fork takes time, and in a timed match that may be too expensive. I on the other hand am more of a long-range player and I am more than willing to sacrifice my Knight to keep my Bishop.

The most important skill required when developing a comprehensive board strategy in a chess match is the ability to not be overtly attached to any specific piece. While you want to keep your Queen for as long as you possibly can during a chess game, you must be willing to sacrifice certain officials just to open up certain corridors within the board that allow you to launch an offensive and turn the game around in your favor.

The most important part of a comprehensive fintech strategy is what you choose to say No to. It is highly unlikely you will build a fintech that finds expression across all customer groups (Retail, SMEs, Large Corporate Entities, and Governments) at the same time. Sometimes you need a strategy that allows you to identify the one or two customer groups you have some kind of inherent advantage in and double down on them. Your inability to properly segment and exclude the customer groups where you don’t have an advantage will probably inhibit your ability to properly execute within the customer groups you do.

There’s a reason Paystack has no clear retail play, Flutterwave dropped their retail business (see Barter app), and OPay will not be serving large corporate entities or Governments (at scale) anytime soon. Know this and know peace.

8. Plan for Momentum and make the most of it when it arrives

The sweetest experience you can have in a chess game is constantly checking your opponent’s King until you either take out a good number of his officials or deliver a final checkmate. You will rarely be able to do this when the game is just starting out (unless the person you’re playing doesn’t know what they’re doing). In most cases, delicate planning and putting the right pieces in the right places is usually the precursor to this momentum attack. A momentum attack gives you a unique opportunity to control the game by mandating your opponent to do exactly what you want (move or defend his King).

Momentum in the fintech business comes when a plethora of factors come together to act in your favor – regulatory posturing creates an opportunity (CBN regulatory framework for MFBs created an opportunity for Zone (formerly Appzone) to deploy their SaaS core banKing solution at scale), a competitor just left the market open for you (Chowdeck), or a product you created is hitting critical mass (Moniepoint). Either way, these factors create an opportunity that if missed can be costly.

The fintech market tends to be a winner-takes-all market. Two or three players will likely control 80% of every market and leave the remaining 20% for the others to scamper for. Momentum creates an opportunity for you to sit among the two or three players in your space, and if you lose it, you may never get it back. During the momentum phase, companies need to be highly vested in fast iteration, listening to their customers, and improving their product. The momentum phase is primarily an opportunity and not just a reward for all your prior efforts. Most people frame the momentum phase as a reward, sit down, and bask in the euphoria of revenue, eventually, the stream stops flowing and they realize they’ve missed an opportunity to own a market. You must make sure you capitalize on momentum when it comes and leverage it to its fullest.

9. You may win on time – the most important thing is to stay alive for as long as possible

I am not ashamed to say that I have won chess matches where my opponent literally decimated my board, took all my officials, and reduced my board to my King and two Pawns. How did I win? I kept running around the board with my King (while my opponent struggled to checkmate me) until my opponent ran out of time.

Sometimes the one thing you need to do is hang in long enough for you to reap the rewards of your labor. You may have entered a market too early before the underlying infrastructure required for that vertical to prosper existed (underlying infrastructure could be anything from payment rails to mobile telecommunication networks to a working middle class). Ideally, most companies pivot to more immediate opportunities to generate revenues to keep the business afloat. That isn’t necessarily a bad thing, but continuing to invest in the underlying product while you pivot for business sustainability purposes can create outsized outcomes somewhere down the line when the infrastructure to run that business within that market begins to show up (or you’ve messed around and actually built the infrastructure yourself) and you can now deploy your service as a pioneer to capitalize on value creation within an emerging market vertical.

P.S: not every business should wait it out, some businesses have exceptionally flawed fundamentals that will translate waiting it out into burning venture capital for no reason.

10. Every move your opponent makes is not consequential

As with every game, intimidating your opponent is a key part of your strategy. Moves like placing a Queen deep into your opponent’s end of the board are usually designed to scare opponents into making silly mistakes that give you an advantage. The idea is that not every move a player makes is consequential, you need to be able to decipher between when an opponent is just moving pieces because it is his turn to play and when an opponent is actually putting a play together as part of his strategy.

Tech news is filled with announcements of news stories that are seemingly a big deal but are mainly vibes and insha allah below the surface. Your ability to decipher between what is worth paying attention to as a fintech leader and what is mainly noise will help you conserve energy, reduce haphazard/non-strategic trend-chasing, and highly reactionary responses to tech information. It is important you can tell which news about a competitor and/or the industry you play in is really worth paying attention to, and which isn’t.

11. If you’re constantly playing defensive, you’re already losing

In every chess game, it is important you are on the offensive as frequently as possible. While there are times when your opponent may be applying pressure to your end of the board, thereby forcing you to play defensive, it is imperative you break out of that as quickly as possible and begin to launch your own attack. If you spend the vast majority of a chess game playing defensive, there’s a high chance that (unless your opponent makes a silly mistake) you’re going to lose that match.

Playing defensive refers to trying to retain market share in a product category being bombarded by competitors. Defending your turf by just trying to get your products at par with competitors may not always be the best strategy. Sometimes you need to turn on the offensive by also trying to innovate, unlock consumption/expand the market, improve on existing product performance, and try to steal market share from other adjacent products within the same vertical.

It is important to note that if you’re constantly being challenged by competitors, you need to critically find a way to redirect that focus away from you, wrest market share from their end while exploring how to expand consumption within that markets.

Conclusion

The Fintech Industry is a broad and emerging one, with opportunities for new value creation, market-defining winners, and market dominance entrenchment. Chess is a highly strategic game that can help fintech leaders better understand the markets they innovate for, and act accordingly.

Inspired By The Holy Spirit

Good luck Nigeria: “On Wednesday, Nigeria’s federal government unveiled a bold new initiative aimed at establishing an operating model and framework for Economic and Financial Inclusion. This project is part of a larger vision to transform Nigeria into a $1 trillion economy by 2030, focusing on combating poverty and driving sustainable economic growth from the grassroots level.”

As the leaders run the playbooks, let me add these components in whatever they plan to do. Yes, these are catalysts which I think will bring that $1T economy. Without them, no initiatives will have a chance. Let’s go….

Merit-based system – no nation has advanced better than its ability to inspire, motivate and reward via merit. Without a nationally transparent merit-based system, Nigeria cannot progress. Yes, the $1trillion will fade.

Pragmatic Innovation – focus on what works, over the purity of scoring political goals. The implication is that we have to seek and execute the best ideas irrespective of where they may be coming. Yes, we must allow data to work and follow the best ideas. Can we spread the deep seaports to Calabar, Ibom, etc instead of building more in congested Lagos?

Honest Leadership – the citizens are smarter and can only take cues from their leaders. People willingly pay taxes when taxes work in their lives, they say. If we preach one thing and do another thing, you lose the citizens. Na kwa echeki!

Integrate Rural and Urban Nigeria – we need to have a functioning postal service, to bridge the huge gap between rural and urban Nigeria.

Put Rural Wealth in Nigeria’s Balance Sheet /Property Rights – those lands (subject to the land use act), houses, etc should be digitized and recorded so that even those in rural Nigeria can enter the formal economy. It is unfortunate that a man with 100 hectares is considered poor because he has no papers to share with banks, to access credits to train his kids and support his family. Simply, Nigeria must advance its property rights governance, not just in land and physical properties but also intellectual properties.

Nigeria Unveils Ambitious Path to a $1 Trillion Economy by 2030: Launches the Economic and Financial Inclusion Initiative

Companies that successfully transform their sectors are adept at staying ahead of customer needs and perceptions, leading to sustained success. Intuit, known for its tax software, employs a strategy of offering many services for free, eventually absorbing competitors into its business without direct acquisitions.

Simply, in today’s rapidly evolving business landscape, the imperative for companies to innovate and stay ahead of customer needs has never been more crucial. With the backdrop of intense competition and dynamic market dynamics, businesses are compelled to embrace strategic leadership and operational excellence to drive long-term success. Innovation lies at the heart of this transformation, encompassing the introduction of new ideas, products, services, or methods to enhance existing processes or pioneer entirely novel solutions. This ethos is underpinned by a customer-centric approach that prioritizes understanding and meeting evolving consumer preferences while fostering resilience – the ability to withstand and recover from disruptions like those seen during events such as the COVID-19 pandemic.

Recent global events have underscored the necessity for companies across sectors to pivot swiftly in response to changing circumstances. The COVID-19 pandemic accelerated digital transformation initiatives, emphasizing agility and adaptability as essential traits for survival in today’s business environment.

Looking forward, businesses are poised to continue prioritizing innovation alongside operational efficiency – delivering maximum output with minimal resources – as they navigate shifting market conditions. Strategic leadership will remain paramount in setting clear visions and making informed decisions that steer organizations towards long-term goals amidst challenges like market saturation and regulatory hurdles. As technology continues its pervasive influence on industries worldwide, integrating data analytics is expected to be a linchpin in shaping future business transformations by providing critical insights into consumer behaviors and market trends.

Yet, in the realm of business transformation and sustained success, it is essential to acknowledge that while staying ahead of customer needs and perceptions is pivotal, it represents just one facet of a multifaceted equation. Companies aiming for sectoral dominance must also prioritize operational efficiency, financial prudence, innovation, and competitive positioning to fortify their standing in the market. Relying solely on customer-centric strategies may overlook critical aspects like long-term sustainability and holistic business management.

Moreover, while strategies like offering free services or focusing intensely on process innovation can yield short-term gains, they may not always guarantee long-term viability. Overemphasis on cost-cutting measures or differentiation through superficial means could potentially neglect crucial elements such as employee satisfaction, customer experience enhancement, or environmental responsibility. A balanced approach that integrates various strategic pillars—ranging from financial stability to organizational culture and sustainable practices—is imperative for companies seeking enduring success in dynamic market landscapes.

The Fish Bait Acquisition Construct

On Wednesday, Nigeria’s federal government unveiled a bold new initiative aimed at establishing an operating model and framework for Economic and Financial Inclusion. This project is part of a larger vision to transform Nigeria into a $1 trillion economy by 2030, focusing on combating poverty and driving sustainable economic growth from the grassroots level.

Vice President Kashim Shettima highlighted the significance of this initiative as a testament to the administration’s commitment to enhancing financial and economic inclusion across the country.

Speaking at the kick-off meeting for the Operating Model for Economic and Financial Inclusion, Shettima noted the administration’s dedication to providing access to capital and eradicating poverty through legislative interventions and critical policies.

This new initiative builds upon the Aso Accord on Economic and Financial Inclusion, unveiled on April 25, 2024. The accord is a comprehensive blueprint designed to achieve universal access to financial services and represents a core pillar of President Bola Tinubu’s Renewed Hope Agenda. This agenda aims to transform Nigeria into a $1 trillion economy by 2030 while addressing poverty and insecurity through broad-based prosperity.

Shettima disclosed that inclusive economic growth and development are at the heart of every strategy championed by Tinubu. He pointed to recent positive outcomes, such as the upgrade of Nigeria’s credit outlook to positive by Fitch Ratings, as recognition of the reform progress under the current administration.

However, Shettima acknowledged the short-term impacts of the reforms and stressed the importance of measures to mitigate the effects, citing the Student Loan Act and efforts by the Federal Ministry of Agriculture and Food Security to combat food insecurity.

The Vice President also highlighted that economic and financial inclusion has been elevated to the agenda of the National Economic Council (NEC), where all governors of the 36 states and the FCT minister participate in crucial policy deliberations alongside other stakeholders. He noted that this elevation underscores the administration’s belief that inclusive growth must be both strategic and sustainable.

Addressing the implementation team and stakeholders, Shettima called on them to recognize the weight of their responsibility.

“You have been entrusted with a vital national assignment, and I have full confidence that you will bring your best efforts to ensure its success,” he stated.

He urged the team to engage all stakeholders fully and contribute their insights, expertise, and dedication to forge a robust operating model that will drive economic and financial inclusion across Nigeria.

Shettima stressed the importance of developing solutions to alleviate the impact of ongoing economic reforms on over 30 million financially excluded Nigerians, propelling the country toward sustainable and inclusive growth.

Speaking at the event, Dr. Nurudeen Zauro, Technical Advisor to the President on Financial Inclusion, reported substantial progress in implementing the Aso Accord on financial inclusion and other initiatives aimed at broadening financial access across the nation. He noted that discussions on financial inclusion have reached the highest levels of government, including the NEC.

Zauro highlighted that the operationalization of the accord has received funding from the Bill & Melinda Gates Foundation through the Lagos Business School (LBS). The team is setting up the operating model and legal framework to ensure the project’s smooth takeoff and alignment with the Renewed Hope Agenda. Collaborators on the team include Augmentum Advisory, Banwo & Ighodalo, and Ndarani (SAN) & CO.

Also, Prof. Olayinka David-West, Project Manager at Lagos Business School, commended the Tinubu administration for prioritizing economic and financial inclusion. She noted that the team at LBS, in collaboration with counterparts in the VP’s office and other stakeholders, is working on the legal framework for financial inclusion and giving the initiative the convening power and national coordination needed to drive ownership across the country.

David-West noted that while LBS and its partners have made deliberate efforts to entrench financial inclusion over the years, the current administration’s initiative will serve as a gateway to successfully operationalizing the policy nationwide.

The engagement with the Vice President aims to identify the right platforms and structures to galvanize relevant authorities to support the initiative.

Current Economic Realities Breed Skeptical Outlook

Nigeria’s economy has faced significant headwinds in recent years, with declining oil revenues, inflation, and foreign exchange instability impacting overall economic performance. The country’s GDP, once a powerhouse in Africa, has struggled to regain its footing, falling below $300 billion. This economic trajectory has led many analysts and citizens to question whether the ambitious goal of transforming Nigeria into a $1 trillion economy by 2030 is achievable under the current administration.

While some analysts believe that the Tinubu administration’s focus on economic and financial inclusion is a step in the right direction, they note it must be coupled with broader economic reforms to address the underlying issues affecting Nigeria’s economy.

For instance, they note that ensuring stability in the foreign exchange market, fostering an environment conducive to foreign investment, and implementing policies that stimulate growth across various sectors are crucial to achieving the ambitious $1 trillion economy target.

While the new initiative and the Aso Accord on Economic and Financial Inclusion provide a framework for addressing some of these challenges, the path to a $1 trillion economy will require more than just regulatory frameworks and financial inclusion efforts, economists note. They add that it will demand a holistic approach, political will, and sustained efforts to drive structural economic reforms and create a resilient, inclusive economy.