What Does The Future Look Like For Fintech Microfinance Banks Operating In Nigeria?

In our civilised world today, one thing that is common and vital in aiding the continuous existence and improvement of civilisation and advancement of man is the act of trading.

Undeniably, this act is something that can't be found in any animal community, except that of we humans. 

Our society depends on it so dearly that without trading, a lot of catastrophic events will occur. We simply need to make an exchange for what we have to get something else that we don't have but desire to have. 

And it is as a result of this need for peaceful exchange that a medium was invented, something of value that must be given out to get what we want. That medium of exchange is what we refer to as money. 

Its first trait is VALUE. Being valuable means that it has to be protected as it is a scarce resource. Everyone wants more of it — the buyer and the seller. 

As a result of this need to protect money, humans saw the need to have institutions of trust that would help in protecting and accounting for this medium of exchange, banks were invented.

The banking industry has a very long history with every era coming with its own uniqueness and advancements to meet the needs of its trustees. Today, in every territory, there are banks alongside their regulatory bodies, but have these banks done well enough for us? 

For a long time, commercial banks have been the thing, whatever side you fall into, seller or buyer, as long as you have money to protect, you have an account set up with a bank.

But, in recent years, there is now a decline in the trust people have on banks, from their seemingly mystic way of operating to the consistent failed transactions to rampant complaints of illegally taking customers' money. People no longer trust these commercial banks and this is where Fintech companies or Microfinance Banks come into the picture.

- Product Name

Microfinance Banks are those miniature banks licensed to carry out financial services.

Initially, they began by acting as loan banks, assisting Small and Medium Enterprises (SMEs) with financial aids to set up or expand their operations, gradually, they started giving out loans to individuals, then as user trust grew, they began engaging in daily banking activities with their customers like sending and receiving of money. 

Today we have them in their hundreds in Nigeria with many of them lacking physical presence, yet, processing transactions running in billions monthly. 

How they are able to do this when the big commercial banks are still in operation, we'd get to find out soon.

- Features: What makes these banks rank?

We'd be making a comparison between these features of theirs and how it relates with commercial banks in Nigeria.

° Ease of granting loans:

Have you ever heard of any statement that says that banks don't give you loans when you are broke and urgently need it, they give it to you when you don't actually need it. To break this down, if you walk into a commercial bank to request for a loan, if you don't have valuable assets, you won't get that loan as these banks only give loans to rich people. 

But in the case of microfinance banks, low income earners can get loans and the process involved in getting these loans are so simple and quick that literally anyone with a proven KYC can get one. This very feature has been one of the key reasons microfinance banks are growing largely today.

° Less or No Transaction Charges:

It seems like microfinance banks leveraged on the harsh economy of the country and made their features resonate accurately with the low income earners. One thing that commercial banks have gained notoriety for is crazy transaction charges. 

They charge you for literally anything you do, and these charges, compiled together, aren't something to overlook. Many Nigerians now see these charges as methods these banks use in subtlety stealing from them in a legal way (kind of) and with the advent of microfinance banks offering lesser transaction fees, Nigerians have made a huge migration, though, not completely.

° Faster Transaction:

What's more painful than making a transfer to someone who needs it urgently and the money takes hours, or even days to reach the receiver's end? Virtually all of us have experienced that sometime in the past, especially during the cash crunch caused by the CBN's and Federal Government cashless policy, but the irony of it was that during those trying times, it was the microfinance banks that came to the aid of many, and even after the cash crunch, many people have made these Microfinance Banks their go-to place for transactions especially business people.

° Mobile App Optimisation: 

Another thing that these microfinance banks have in common is the optimisation of their mobile Apps. Click to action rate is fast, their apps are user friendly and one can open an account and make transactions right there on the app. 

This is unlike that of the commercial banks that have a touch of ambiguity, often slow and as many users have complained, crash a lot. Aside from that, the apps of these commercial banks are storage intensive, hence, they pose a challenge for users whose phones have low storage. User interface is equally terribly poor!

° Customer Service:

What do you expect from an organisation that has little or no physical presence? Great customer service. With Microfinance Banks, one can lay a complaint, report a problem and even block transactions on their accounts with just a phone call or from the App. in the case of commercial banks, many of the stuff you have to do can't be done remotely either due to unavailability of good remote customer service or bank policies.

When it comes to overall performance of microfinance banks, they've done a very good job making banking easier in this digital era, but they are not perfect, not exactly close to being perfect as the banking system is so vast that there are a million and one thing that can go wrong which oftentimes isn't the fault of the banks.

They still need to work on some of their services, especially in the areas of security. The ease of validating user requests can be exploited by cyber criminals and used against their unsuspecting customers.

Establishment of more physical offices is also something many of them don't take seriously, not only does it make them look mature and ready for business, it increases accountability. Well, at least in the African/Nigerian business space where total digital or contactless operation is yet to be fully adopted.

Aside from security, they also fail when it comes to issuing debit cards, their delivery time range isn't always accurate which is a terrible thing, and they have limited availability of card issuing companies. Opay for instance supports only Verve cards (at the time of making this report) making it difficult for customers who prefer other card companies to key in to their debit card feature.

- An Ending Note 

No Bank can do it better than the rest, it's an infinite competition, but Microfinance Banks have indeed raised the hopes of many when it comes to banking.

To answer the question "What Does The Future Look Like For Fintech Microfinance Banks Operating In Nigeria?" The future is indeed is promising, although the competition is tight, but only the most innovative can evolve and survive the next big swipe.