Category: Payments and credit

I’ve spent my life inside this ecosystem, building and running systems that move money and make credit happen. I know what it looks like when payments go wrong, when transfers stall, when direct debit never lands, and when virtual accounts actually save your day. I know who makes it work and who’s just pretending.

Credit is the same story. Loans get approved, loans get rejected, and most of the time the systems behind them are fragile, incomplete, or badly designed. I’ve seen how financial inclusion can succeed when the tools are right, and how easily it falls apart when they’re not. Fraud, compliance, risk, all of it matters, but mostly in ways that aren’t obvious until you’re running the numbers or watching someone abuse a gap in real time.

I write about this stuff the way I see it, from the ground. No hype, no feel-good stories, no “on paper this looks great” nonsense. Just what actually happens, what breaks, and how to build systems that can survive it.

Releasing telco data for underwriting is better for the poor

Consent-based telco data could become the first credible risk signal for people without formal credit histories. If lenders can access phone usage patterns through open APIs, with explicit customer permission, auditability, and privacy controls, millions of invisible borrowers may finally get a fair shot at small-ticket credit.

If you spend enough time around lenders trying to serve everyday people in developing countries, you’ll notice that their biggest frustration is not even defaults. Yes, defaults hurt, but most of them accept that as part of the business. What keeps them stuck is more basic. They struggle to make confident credit decisions because, for a large part of the population, there is nothing reliable to base those decisions on.

The chicken-and-egg nature of this problem is something I’ve been thinking about for a long time. I wrote a piece on it last year, and even before that, I had co-authored a 2021 paper on using open APIs to drive financial inclusion through credit scoring built on telecoms data. The contradiction is obvious the moment you state it plainly. You need credit history to access credit, but you can only build credit history by accessing credit.

So if you’ve never had a formal loan, never held a bank account long enough for it to mean something, never interacted with any financial institution in a way that left a data trail, where does your story begin? For most people trying to enter the formal lending world, it doesn’t begin anywhere. You don’t exist as a credit subject, which is a polite way of saying that nobody is going to give you money regardless of how reliably you’ve managed every dollar that has ever passed through your hands.

So credit providers end up guessing, tightening, or stepping away entirely. None of those outcomes expands the market.

So what has worked in Africa, when so many other things haven’t?

Africa has seen a lot of well-meaning interventions that arrived with serious fanfare and left very quietly. Banking penetration has been a decades-long project with results that remain modest across many markets. Credit bureaus exist, but their coverage is thin because you cannot bureau-fy people who have never been inside the system in the first place. Identification infrastructure is still catching up in most places. But if you ask what technology has reached the population across the continent, there is one practical answer, and it’s the mobile phone.

Phones are everywhere, and I don’t say that loosely. The average Nigerian is carrying two, three, sometimes four SIM lines simultaneously, and that pattern repeats itself across the continent in ways that have consistently surprised economists and policy people who expected adoption to crawl.

What happened instead is that Africans skipped entire layers of infrastructure that the rest of the world spent decades carefully constructing and went straight to mobile. They use their phones for everything, communication, money transfers, business coordination, accessing information, entertainment, maintaining social networks that would otherwise require physical proximity. For most people at the base of the pyramid, the phone is the technology of their entire connected existence, and they have embraced it with an enthusiasm that no government awareness campaign could have manufactured or sustained.

There are even academic papers now making the case that the way a person uses their phone is predictive of their creditworthiness, and the logic holds up. The patterns are there in the data: call frequency, network breadth, airtime recharge behavior, mobile money activity, data usage consistency over time. None of these data points were designed with lending in mind, but together they show patterns of behavioral reliability and economic rhythm that can give lenders a first risk signal where a credit file does not exist. The data is already being generated every single day, sitting with the telcos, produced by the hundreds of millions of people who have no credit score but active SIM cards and consistent patterns of behavior that a decent model can read.

Why NCC can’t solve this alone, and why GSMA should care

The Nigerian Communications Commission has a mandate, and financial inclusion sits outside the center of it, and that’s not a criticism of the NCC so much as a simple observation about institutional scope and design. The GSMA, on the other hand, operates at a continental level and has always had financial inclusion threaded through its thinking about what mobile’s social role actually is and should be. That puts the GSMA in a position to shape something useful across multiple markets.

I’m proposing a consent-based framework, most likely built around open APIs, where customers can authorize access to their phone usage history specifically for the purpose of credit assessment. Consent here has to carry real weight. That means consent cannot just be a checkbox buried inside a loan flow. This framework has nothing to do with telcos quietly selling behavioral data to lenders or anyone having access to anyone’s information without a clear, traceable, customer-triggered permission event tied to a specific loan request. The customer controls access. They open it when they want a loan, they see exactly who is asking for access and what they’re asking for, and the telco releases the data under conditions that make it useful for underwriting without turning it into something that can be repurposed for surveillance or profiling beyond the stated use case.

The economics of this model are straightforward, and that cleanliness is part of why I think it has real legs. The consumer doesn’t pay out of pocket, which matters when you’re talking about people for whom every transaction cost is a real consideration. They’re already the asset in the sense that their data is what makes the whole thing function, but they receive value back in the form of credit access they couldn’t get through any other channel.

The lender pays for the data, which is reasonable because they’re acquiring a risk assessment capability they currently don’t have and need. The telco monetizes an asset they’re already sitting on, generated as a byproduct of their existing operations, without doing anything extractive or exploitative to produce it. Each party gets something it wants and contributes something the others need. That is why the model can sustain itself without requiring ongoing subsidies or regulatory mandates to keep it alive.

The model also needs a customer-visible record. Every time a lender pulls a customer’s telco data, the customer should receive a real-time notification telling them exactly what was accessed, when, and by whom. That notification architecture isn’t technically complicated to build into the system, and it does work beyond the mechanics of data access. It helps build trust by making customers feel like informed participants rather than data sources that get mined without their knowledge. Without that distinction, customers may eventually see the whole thing as another data grab.

MTN killing Xtratime shows how fragile small-ticket credit still is

MTN recently stopped giving out Xtratime loans, and the reasons sit somewhere in the space between FCCPC regulatory pressure and compliance positioning that I won’t pretend to fully judge from where I’m sitting. But every time a major credit provider, whether it’s a bank, a telco, or anyone else operating at that scale in the small-ticket credit market, decides to exit: the people who absorb the damage are usually the people at the bottom of the pyramid.

There’s that saying about when two elephants fight, it is the grass that suffers, and it applies here with a precision that should make anyone in financial services uncomfortable. The regulatory arguments are real, compliance concerns are legitimate and the internal risk calculations that led to the decision are probably defensible on paper. Unfortunately, none of that changes the outcome on the ground for millions of people who are borrowing airtime and data to cover the gap between today and whenever their next income cycle lands.

Those people don’t get a press release explaining the regulatory rationale. Instead, they get a closed door slam shut in their faces, and then they turn to the next available option, which is very rarely another regulated institution with reasonable rates and consumer protection obligations. It’s a moneylender with very different incentives, or a family network already under its own financial strain, or simply going without and managing the consequences of that.

Or worse still, forced to consider unethical alternatives.

The telco data model I’m describing is partly a direct response to this kind of fragility in the system. If the underwriting infrastructure for small-ticket credit is better, more distributed across multiple lenders rather than concentrated in a few major players, then the system becomes more resilient to these kinds of exits. One major player pulling back doesn’t collapse the whole market because the capability to assess creditworthiness for people without formal credit files is embedded in the infrastructure itself rather than sitting inside any single institution’s proprietary system.

Walking through how this actually works when someone needs a loan

Here is how it works when someone needs a loan.

Someone needs a loan, maybe it’s $10, maybe it’s $100, and the amount doesn’t change how the process works. They approach a lender. The lender, rather than asking for a credit score that doesn’t exist or collateral that the borrower doesn’t have, instead asks for consent to access six months of phone usage data through the telco. The customer gives that consent on their device through the available interface, a push notification, an in-app prompt, and the telco generates a one-time, purpose-limited data package in direct response to that consent event.

That package needs specific properties for privacy and trust. It is genuinely single-use, meaning the lender cannot pull the same data again without initiating a completely fresh consent process with the customer.

The phone numbers that appear within the dataset are not exposed raw. They are hashed or encrypted with consistent values across the dataset, and even then the lender should only receive the features needed for underwriting. The lender can see behavioral patterns, such as whether this person regularly communicates with a stable network of contacts or whether their call behavior is consistent and not erratic, without receiving the actual phone numbers in that person’s communication history. The lender looks at the timing patterns, the usage consistency, the behavioral signals that the model surfaces, makes a credit decision, and either extends the loan or declines.

When the customer comes back for another loan later, the process starts fresh with a new consent event and a new one-time data pull. Nothing accumulates on the lender’s side without an explicit new permission, and the customer’s data doesn’t sit in a lender’s database being used for purposes they never agreed to.

One hard part in this model is USSD. Many of the people this whole framework is designed to reach still rely on USSD for their phone interactions because smartphone penetration, while growing fast, hasn’t reached everyone yet. Building a clear consent flow over USSD is technically harder than building it through a smartphone interface, and any implementation that only works smoothly for smartphone users has already left out a portion of the exact population it was supposed to serve. That is solvable, but it requires deliberate attention during design, not bolted on after the smartphone version is built.

Telco data can become the first credit file

The data exists, and the need exists. The technology to connect them in a consent-based way that protects customers and still makes commercial sense also exists. What has been missing is an institution with enough reach to build the framework, and the strongest candidate for that framework is an organization like the GSMA that operates simultaneously across the telco industry and the financial inclusion space without being owned by a single telco or lender.

The people who need credit the most are consistently the ones who have the least documentation of their reliability, and that is where traditional credit systems fail. Telco data doesn’t solve every dimension of that problem, and I’m not suggesting it does. It is not a replacement for credit bureaus. But it addresses the immediate blocker, which is giving lenders a credible signal to assess someone who has never had a formal credit relationship in their life.

When lenders have something credible to look at, some of them will lend. When some of them lend to people who couldn’t access credit before, and those people repay, the data trail from those transactions starts to build the credit history that was missing in the first place. But that repayment history has to become portable, through credit bureaus, open finance rails, or another recognized system. Otherwise, the borrower only graduates inside one lender’s database.

That is the practical value of consented telco data: it can become the first credit file for people who currently have none.

Virtual accounts could be the next big thing in African payments

Let’s be real: innovation in Africa doesn’t get the recognition it deserves. The world tends to assume we’re just playing catch-up, but sometimes, we take an existing idea and run with it so effectively that we make it ours. Case in point: virtual accounts.

Now, virtual accounts aren’t a Nigerian invention. They’ve been around for years, quietly solving payment problems in other parts of the world. But Nigeria? We’ve taken this product and turned it into a payment powerhouse. Today, virtual accounts aren’t just another payment method here; they’re the payment method. Cards, POS terminals, even mobile wallets? All trailing behind.

If you’re reading this from a country like the US, Canada, or somewhere in Europe, you probably don’t get why virtual accounts are such a big deal. That’s because your payments ecosystem actually works. You’ve got working credit cards, smooth PayPal transactions, and Apple Pay that actually pays. Good for you.

But here in Africa and other parts of the world, where payment systems were stuck in the 2000s until recently, virtual accounts are a lifesaver.

So, what are virtual accounts, and why are they so important for Africa? I’ll explain, but first, let’s briefly discuss what problems virtual accounts solve.

The problem that a virtual account solves

For those unfamiliar, a virtual account is essentially a unique bank account number tied to a specific transaction or customer. It allows you to make payments via direct transfer — no cards, cash, or complicated hoops to jump through.

Why does this matter? Because in markets like Nigeria, payments via card or POS terminals are unreliable at best and a nightmare at worst. Imagine running a small business, and a customer wants to pay online. The card they’re using hasn’t been activated for online transactions. Or they don’t get the OTP on time. Or their card is expired, damaged, or lost. The transaction fails, and you’re left hanging.

Virtual accounts, however, eliminate drama by letting customers pay directly from their bank accounts — no cards, no delays, and no nonsense. It’s no surprise that businesses and individuals in Nigeria quickly embraced this method.

What started as a convenient alternative has now become the dominant payment channel.

Why Nigeria became Africa’s poster child for virtual accounts

The funny thing about Nigeria’s success with virtual accounts is that it wasn’t inevitable. In fact, it’s a story of two unlikely players — Moniepoint (then TeamApt) and Providus Bank — taking a huge gamble on a product that didn’t seem necessary at first.

Back in 2019, Moniepoint had just been issued its switching license by the Central Bank of Nigeria, and Providus was still finding its feet as a regional commercial bank. The payments landscape was crowded with established players like Paystack, Flutterwave, and Interswitch. Virtual accounts weren’t on anyone’s radar. Yet, these two took a chance, and the results were transformative.

At the time, everyone was focused on card payments. But the reality was bleak. Out of 100 bank account holders, typically, only about 60 have cards. Many of those cards were inactive or damaged. OTPs and online activation processes were another layer of inconvenience. Virtual accounts provided a simple alternative: direct transfers.

Within a year, virtual accounts were everywhere, powering everything from e-commerce to utility payments. Today, they’ve cemented their place as the backbone of Nigeria’s payment ecosystem.

So, why hasn’t the rest of Africa caught on? And should they care

This is the question that keeps me up at night. Virtual accounts have proven themselves in Nigeria, so why aren’t they taking off across the rest of the continent?

Of the 54 countries in Africa, 26 currently support faster payments, making them compatible with virtual account technology. This foundation is significant, but adoption hasn’t taken off continent-wide. Why?

Part of the answer lies in how payments work in other African countries. Take East Africa, for example. Mobile money reigns supreme. Payments systems like M-Pesa have made it so easy to transfer money to anyone and anything that banks have taken a back seat.

But here’s the catch: mobile money isn’t always the best solution. It’s great for peer-to-peer transfers and small transactions but struggles with larger payments or complex business needs. That’s where virtual accounts could come in, offering a bridge between mobile money and traditional banking systems.

Another factor is infrastructure. Virtual accounts rely on robust interbank transfer systems, and while 19 African countries, as of January 2025, have these systems in place, the remaining 28 lag behind. For these regions, faster payments are a prerequisite for virtual accounts to thrive.

Why fintechs should bet on virtual accounts

Let’s call it like it is: African fintechs need a new growth path, and virtual accounts might just be the answer. The card market? It’s tapped out. Not everyone has cards; even if they do, the infrastructure to support them is shaky. Failed transactions, delayed authorizations — it’s a mess.

And don’t get me started on International Money Transfer Operators (IMTOs). Once the golden child of fintech, the sector is now overcrowded. Margins are shrinking, competition is fierce, and any founder banking entirely on IMTOs is running on borrowed time.

But here’s where virtual accounts come in. Unlike some shiny new fintech trends, virtual accounts aren’t just theory. They’ve been stress-tested in Nigeria, and not only did they survive, they thrived. They’ve become the backbone of payments, handling everything from e-commerce transactions to utility bills with ease.

Of course, nothing worth doing comes without its hurdles. Virtual accounts rely on fast and reliable interbank transfers; a luxury not every African country has right now. Then there’s the regulatory elephant in the room. Some regulators might hesitate, not because virtual accounts are flawed, but because entrenched players like Mobile Money Operators (MMOs) will fight tooth and nail to keep their dominance.

However, these challenges aren’t insurmountable. Fintechs that lean into virtual accounts are positioning themselves for growth in a market hungry for innovation. If we’ve learned anything from Nigeria, it’s that virtual accounts don’t just work; they win. The rest of Africa is the next frontier, and anyone not paying attention is missing the plot.

A uniquely African solution

What I love about virtual accounts is how they’ve adapted to Africa’s realities. They’re not just a repackaged Silicon Valley solution. They’re built on the backbone of our banking systems, solving problems specific to our markets.

And let’s not forget the cost factor. For businesses, virtual accounts are often cheaper than card systems or mobile money. That’s a big deal in a continent where every naira, shilling, or rand counts.

During the Nigerian End SARS protests, which shockingly was 5 years ago, the power of virtual accounts was evident. As financial restrictions tightened, many turned to virtual accounts for transactions, further cementing their role in Nigeria’s payments ecosystem.

If you ask me, virtual accounts are just getting started. Nigeria has shown what’s possible, but the real potential lies in taking this product across Africa and even beyond.

Imagine virtual accounts in countries where cross-border trade is booming but payment systems are lagging behind. Or in regions where mobile money has hit its limits, and large corporations like Safaricom, Naspers, and Dangote Industries, among others, need a more reliable alternative. The possibilities are endless.

Virtual accounts aren’t just a Nigerian success story; they’re a blueprint for how Africa can lead in payments innovation. Imagine their potential in countries where cross-border trade is booming but payment systems are lagging. Or in regions where mobile money is showing its age and businesses need a more reliable alternative.

Contactless cards can revolutionize payments in Nigeria

Contactless payments could revolutionize Nigeria’s payment system with their speed and convenience, but adoption remains slow due to regulatory gaps, trust issues, and limited infrastructure. To overcome this, banks should partner with high-traffic merchants and launch campaigns to showcase the ease of tap-and-go payments. With the right push, contactless transactions could become mainstream, driving a significant boost in cashless payments across the country.

The ease and speed of a payment method are directly proportional to its adoption. Although payment with cards has been growing at about 100 per cent CAGR over the last three years, all you need to do is stand behind that smug, self-entitled millennial stamping her feet while waiting for a purchase to finish to know that paying with debit cards at POS terminals would never be mainstream for everyday payments.

The UK was at the same junction a few years ago although using your card for payments was significantly faster. Then things changed when banks allowed regular debit and credit cards to be used to tap-in and out on buses, trains, and trams. Contactless transactions exploded. You only need to see contactless payments in action for you to be smitten.

You will ask yourself just one question: why have we suffered this long?

When properly configured, contactless payments go through in less than 1 second, just the same time it takes to touch the card to the reader, and that’s it.

How do contactless cards work?

Not so simple. On a contactless card, the plastic has a small antenna that allows it to wirelessly transmit payments information from the chip on the card to the card reader. When you touch your card against the reader, they both talk to each other. Contactless can work in both online mode (where transactions are sent to the bank for authorization) and offline mode (where the bank gives some leeway to allow payments to be approved by the chip on the card).

For security reasons, banks, governed by national standards, set certain limits. For example, the bank will determine the number of times you can do touch-and-go before you can use your card for online payments (where you have to input your PIN). Also, there is also a maximum amount you can do at a time. You can read about the limits for different countries here.

Despite the benefits of contactless, this is yet to catch on in Nigeria. Nevertheless, this has not stopped banks from taking the bull by the horn. Over the last three years, Nigerian banks have been giving out contactless cards by default to all customers. Despite the N30,000 limit, but with no places to use them, it has been an exercise in futility.

The challenges to using contactless in Nigeria are not as many as I previously thought though they are not trivial.

There are no playbooks for contactless payments in Nigeria. In other countries, the regulators always specify the rules that govern payments, including contactless. We have a myriad of regulations for payments in Nigeria, but none is looking at how contactless should work.

Risk acceptance in Nigeria is also a challenge. Abroad, banks trust that transactions done in offline mode will always be paid by the customers. And when cards are stolen, the banks will refund the customer the amount the thieves have done for offline payments. In Nigeria, banks don’t trust the customers to pay back, and the customers don’t trust their banks to make good of money stolen when contactless cards are lost. An impasse ensues.

There are hardly any shops in which you can use contactless cards. It’s one thing to have a contactless card; it’s another thing to have places you can use them. The millions of cardholders taking their contactless cards around use them as decorations since they are no places to tap and go. This, however, creates a chicken and egg problem. Apart from card issuance, no other bank is serious with contactless cards, so the market is small, so this makes banks not to invest in contactless reader POS. Why buy POS that nobody would use.

Irrespective of the challenges of contactless cards acceptance and issuance, the immense benefits and its ability to transform payments and make cashless real means it makes sense to pursue its usage. And the pressure on every bank, there are more cardholders than users of USSD and mobile apps.

Product managers can deal with this by getting customers to activate their contactless cards. And they could work this way. Cardholders need to be shown the ATMs, insert their cards, and press in the PIN; an action will be displayed on the screen that will show them a pop-up message from CBN that puts a card on the line in their accounts. Each customer will be responsible for his settings, and if the card gets lost, well, it’s like your wallet getting lost with the cash you just got from the ATM. The benefits are apparent; banks reduce their liability while customers can see what they are comfortable with to get the benefits of faster checkouts.

Banks should have a strategic partnership with high-traffic merchants such as tolls and major supermarkets. These would be anchor merchants that can help drive the adoption of the usage. After all, a picture is worth a thousand words – nothing will convince anyone to adopt contactless faster than seeing it in action. And by the way, the merchants also enjoy contactless as they can handle customers more quickly during peak shopping periods.

With those two things in place, the last logical piece of the tripod legs would be a massive campaign to let customers know about contactless. Nigerians are very aspirational so getting a few A-listers and Nollywood stars to be the face of this would quickly turn tap-and-go into a must do for everyone.

When the ease of payment with cards is not due to an actual counting of dirty Naira notes to make payments, we should be looking at annual transactions at least ten times more than the 2023 POS payments.

10 predictions for digital payments in 2024

A lot is going to happen in 2024, but do you want to know what they would be?

I have been making annual fintech predictions for so long that I should be a certified babalawo by now. Unfortunately, most of these predictions never come to pass.

Interestingly, some of these predictions have been on point such as a major player getting acquired; Payments Services banks flopping; CBN cashless policy failing; rise of agency banking; eNaira eating dust; etc.

Many have also stubbornly refused to come true; rendering me a digital Nostradamus. Visa refused to buy Interswitch and Mastercard refused to buy Etranzact; transfers never became free;

But then missing the point is what predictions are all about; getting excited about things we don’t know and probably won’t happen.

In the grand scheme of things, to err is human and to predict, is human as well. Let’s see what 2024 has got in stock.

The Central Bank of Nigeria recently unbanned crypto and everyone threw a party. But we keep forgetting why they got banned in the first place. Truth is crypto doesn’t offer much value beyond the ability to move tons of money around without governance which tends to attract the wrong sort of crowd.

Once this gets abused again, and it will definitely be; a new ban would land and this could be permanent or the requirements so stringent that it’s a technical ban.

#2 Nigerian banks screws up cNGN stablecoin

In unbanning crypto, the Central Bank of Nigeria also said that banks could have stablecoins. I laughed in Ijesha. Is it the same banks that can’t handle simple fraud issues; get QR to work on their apps; and keep their best hands; that would build and run stable coins?

Sure, CEOs would drag their helpless CTOs to try something out but they will all fail spectacularly.💣

Nigeria banking and crypto are like oil and water; everyone should just stay in their lanes.

#3 Direct debit comes of age

Cards ruled the payments world for decades. Then faster payments came along. In Nigeria, interbank transfers beat the hell out of cards. But cards still rule the internet and subscription payments like an aging African dictator.

Maybe not for long; NIBSS, Paystack, OnePipe, Mono, and Lendsqr (yes, let me throw that in) have been hard at work making direct debit sexy and it’s probably going to explode.

Direct debit is going to be the fastest growing payment method since virtual accounts.

#4 Interbank crosses 20 billion transfers in a year

When you do a transfer and the money appears in your recipient’s bank account in seconds, it’s probably the guys at NIBSS doing magic. Transferring money has been growing faster and faster each year since 2011.

In 2023, Nigerians sent more money through NIBSS in a day than they did in the whole of 2015. That’s over 365x.

The ease of transfer is so unprecedented that maybe this is the year that 20 billion alerts will ring across the network.

#5 Open Banking goes live

We have been at this for too long. By June 1, it would be 7 years since I have been shilling open banking across Nigeria and Africa like a snake oil salesman. This time around, I am not predicting, I’m begging the gods of whatever to just let this go live so I can focus on other things. I’m not young again.

#6 Banks and Fintech crack on fraud

The Nigerian payments space is now synonymous with fraud. In 2023, over N14b was tracked to have been lost with many pundits privately saying this was grossly underreported. However, different stakeholders from FintechNGR CEO Committee (I’m a member), to the Central Bank of Nigeria, and even NIBSS, are all planning an all-out offensive against fraud.

You can’t understand how painful fraud is until you have lost money or your entire career upended because of fraud. The worst that can happen isn’t just to lose money, but to spend months in detention for a fraud you don’t know anything about.

#7 Agency banking evolves

Agency banking was one of the fastest growing fintech segments for about 4 years and that led to the rise of Moniepoint, Nomba, and MTN Momo. But the market is getting saturated; margins are thinning out; and agent loyalty is now as rare as a unicorn riding a Yeti.

But knowing the smart guys around payments, trust them to build more values on top of the agency ecosystem. What could this be? Delivery; address verification; last-mile lending; returns drop-offs; etc. Whatever brings extra is god-send.

#8 A major player gets acquired

With the Nigerian economy so badly hit and the Naira falling faster than a meteor; valuation of Nigerian fintechs have taken such a bad hit that most can’t even afford to do a raise as it would be at a significant valuation discount. Yet, most of those who haven’t died are doing a good job.

It means those alive are now cheap as hell to buy; with cash runways now measured in days and weeks; it’s a matter of time a good one with solid fundamentals is snapped up.

#9 More fintechs bite the dust

The funding winter has proven to be long, harsh, and deadly. Every month we get inundated with burial ceremonies of one fintech or the other. Unfortunately, the funding pandemic may last longer and even more startups will die in the early part of the year than ever before. And it’s simply because most are running out of gas and funding conversations are not funny.

But for startups who manage to stay alive, expect glory from 2025.

#10 NQR finally found legs

Paystack, Moniepoint and Nomba have been doing a number with tabletop payments in the last 18 months. Walk into any shop and you see a cardboard or plastic with QR code or account number to pay into. The reason why this hasn’t caught on is because Nigerian banks have been poor with their QR code payments. Of the 20 major banks, you can only pay with QR on just 6 of them.

But things could change this year because #1 CBN could whip banks into shape, forcing them to make this work and then customers could use them or #2 fintechs and others would use shame or moral suasion to make banks do the right thing.

If NQR pans out; it could blow up payments.

Wondering what happened the previous years and the predictions? Read about my takes for 2018, 2019, 2020, 2021, 2022, and 2023.

Fraudsters are raping the Nigerian fintech space to death

Rape and financial fraud share a common thread: the silence of victims, often due to shame. In Nigeria, banks and fintechs suffer a N12 billion loss to fraud, yet remain silent, fearing the stigma. This silence hampers justice and perpetuates the cycle of crime.

Rape is the absolutely worst thing that could happen to anyone. It’s so horrible that if rapists are caught and sentenced to death, many people won’t even bat an eye and simply believe it’s justified. It’s so horrible that some rape victims commit suicide.

But if it’s such a terrible offense with severe consequences, why do rapists often get away without consequences? The answer is pretty straightforward, albeit very sad: Most rape victims would rather keep mum than expose these bastards.

Naturally, the next question could be why are victims so reluctant to step forward to the extent that many accept that they may never get justice but stay silent all the same?

The answer to this, much like the former, is also quite straightforward.

Shame.

Nigerian banks and fintechs have been shamed into a N12 billion silence

It’s no secret that victims are often shamed into silence and even merely the thought of being shamed is enough of a deterrent for those who may want to speak up. Many times, people even forget about the guilty party and focus on grasping at straws to blame the victim and try to convince them that they were complicit in their attack.

Similarly, shame is what makes it difficult for financial providers whose businesses have been defrauded to speak up even when they can get justice from the authorities.

Would you believe that since the start of the year, there has been a systematic rape of banks and fintech? I’ve personally tallied ~N12 billion lost to frauds and hack. Every bank and fintech hit has been groaning in silence but no one is ready to speak up.

And I’m not just talking about small or new banks, I’m talking about from the big 5 banks all the way down to the smallest ones; fintechs included. Business Day recently mentioned Fidelity, Access Bank, and others who have lost billions to fraud over the last few months.

The discussions about fraud are happening behind closed doors, Telegram channels, WhatsApp groups and the groans are growing louder but still, no one is ready to break this costly silence.

And that, fellow Nigeria, is what the fraudsters are banking on.

Why is fraud running so rampant?

A major cause for concern is sloppy APIs and weak security infrastructure that allows bad actors to gain access to financial systems and move money out. However, despite the more sophisticated systems and security measures with the large banks, people are often the weak links in the system.

Generally, humans will be careless but it also happens that bank staff are bribed to bring in compromised devices to work, etc. which makes it possible for fraudsters to access the banks’ database externally and use private APIs to perpetuate all sorts of crimes.

Of course, we can’t leave out the fraud committed using debit/credit cards and POS machines. Chargeback fraud is so rife you could write an entire book around it. Chargeback destroyed Union54, a once promising African card processor.

What happens to the stolen funds?

Well, the stolen funds take quite the journey. First, the money is sent to another bank, split and passed through even more banks before it then moves through some certain new generation banks; some of which are foreign-owned.

Nigerian banks protect themselves. When cases of unauthorized transactions are reported, it usually triggers a flurry of emails and calls between the banks and the accounts suspected to be involved are restricted pending further investigation. There’s a legal agreement between banks to do this. Albeit, not sanctioned by CBN.

Unfortunately, the new generation banks and fintechs don’t comply with this rule and so the stolen funds simply disappear. Poof!

What’s the implication if this continues?

The reality is that the traditional commercial banks make enough profit to cover getting hacked by APIs so while we should be concerned about them, they’re not the ones most affected by this menace.

The real problem is with the everyday Nigerian who loses their hard-earned money. If the banks are unable to trace where the money went, there’s nothing they can do and their money is simply gone.

The ability of the financial sector to play its role effectively is rooted in trust. Even the strongest economy will crumble if end users lose faith in the financial system. This is what’s at stake while fraudsters continue to destroy decades of work that the CBN, banks, and fintechs put in to build the system we currently have.

For all its many woes, Nigeria is actually ahead of quite a number of its counterparts in terms of the capabilities in the financial sector; especially with electronic transactions.

Therefore, if Nigerians lose in electronic transactions, that sets us back significantly and all hopes of growing the economy vanish.

By law and regulations, banks and fintechs are required to declare to the CBN whenever there is fraud; either hacks or just the everyday “Nigerian Prince” scenarios. But we have to be pragmatic for a minute here. Remember the shame we spoke about earlier? Well, this is where it comes in. The shame associated with declaring a successful fraud attack to the CBN prevents affected organizations from doing so.

If you have had the misfortune of CBN having you to explain your mistakes, then you would understand while sometimes when you kids get bullied in school, (or even more dastardly, raped) then you would know why no bank sings to the CBN when they are taken advantage of.

To make it worse, when customers hear a bank has been hacked, it immediately reflects poorly on the business and suggests incompetence and an inability to meet expectations.

It’s almost like the fraudsters responsible for these terrible acts don’t even exist at all.

But who is to blame here?

The short answer is everyone!.

Quality of human resources within the banking and fintech ecosystems have taken the hit as every smart one of them has “japa“. Some of us may claim to “love” Naija but the truth is, the best and brightest have gone leaving us at the mercy of digital night marauders.

Poor quality has led to poorer platforms. We now have very powerful APIs and other technical capabilities with sub-par resources to monitor and secure them. We are all dead men walking.

Banks and fintechs are sloppy with their Know Your Customer (KYC) and Customer Due Diligence (CDD). Or how do you explain Adedeji with N100k inflow over 24 months suddenly getting N10m and immediately moving that money out?

Super agents aren’t able to explain how sudden cash flies through some agents as cash and there are no ways to hold anyone accountable.

CBN is also not on top of these fraud issues. They don’t need someone to report themselves to know that all isn’t right with the system.

Enough of victim blaming and shaming.

How do we restore the trust that lines the financial system

We’ve already established that everyone has dropped the ball but irrespective of who’s to blame, this issue must be addressed urgently. If not, once the trust in the system is destroyed, the center wouldn’t hold. Fintechs and digital financial services is one great thing Nigeria does well. It shouldn’t die.

CBN and banks should lead a tougher chargeback regime, similar to what happens with cards, for interbank frauds. This will force every bank to take KYC and CDD seriously.

Any bank on the chain found not to have done proper fraud profiling for transactions should be held responsible for the amount that passed through them. Enough of end-customers holding the bag when everything goes south. Let’s hold banks accountable for a change.

CBN, Banks and NIBSS should make it easier for anyone to report fraud. The current process is broken and doesn’t help anyone. They need to collaborate with the Nigerian Communications Commision (NCC) to make fraud so expensive for fraudsters so they reconsider their career choice.

For instance, once implicated, a fraudster should be banned from all electronic transaction channels from 1 year to forever. Good luck to this individual.

The issue here is consequence management. When the authorities make the consequence for fraud expensive and damning, fraudsters will begin to borrow some sense.

Until then, welcome to the league of the onlookers. Because everyday is like Christmas for these fraudsters while the rest of us are wondering when this comic episode will end.