Stop wondering about what the hyenas have to do with the fintech. Hyenas are skilled hunters. They are efficient. They are effective. They work together in packs. They hunt large prey such as wildebeests and zebras. They are difficult to outsmart. If you think you have conquered one hyena, you are a prey!  The Animal Encyclopaedia explained that the cooperative hunting strategy allows hyenas to capture animals much larger than themselves.

On the one hand

Hyenas can locate prey from great distances. This keen olfactory ability is essential for their survival in the vast African savannahs. Like scavengers, hyenas keep the field clean by ensuring no carcass goes to waste. The hyena’s strategy works. The fintech community might borrow a page from the Hyena Strategy Playbook.

On the other hand

The Hyena Strategy Playbook will work for the fintech associations operating in silos. There are a handful of fintech associations around. We have FintechNGR. Fintech CEO. Fintech founders. Fintech startup CEOs, etc. FintechNGR is a self-regulatory, not-for-profit, and non-political organisation incorporated by the Corporate Affairs Commission, CAC.

It is a member of the Global Fintech Hubs Federation. It serves the development of the fintech industry in Nigeria. It is a forum for ideas exchange and dissemination. It interfaces with the Central Bank of Nigeria, Security & Exchange Commission, the National Insurance Commission, and the government at all levels. Other silo associations are for self-glorification only.

In the long term

Coming together to fight common enemies like the hyenas is the way to go. That is why the Kenyan financial fintech sector, five major associations, has formed an umbrella alliance dedicated to driving the growth and development of the industry: The Fintech Alliance (TFA). This body comprises the Association of Fintechs in Kenya (AFIK). Fintech Association of Kenya (FINTAK). Digital Financial Services Association of Kenya (DFSAK). Digital Credit Providers Association (DCPAK). Blockchain Association of Kenya (BAK).

In a report, the spokesperson of TFA, Ali Hussein, said, “Today marks a significant milestone for Kenya’s fintech sector. By uniting under the Fintech Alliance, we are ready to address challenges, seize opportunities, and drive meaningful change in the industry. Together, we will shape the future of fintech in Kenya and beyond.”

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With this body, it is easy for TFA to catalyse economic and social growth. It will leverage fintech solutions. It will enhance financial inclusion. It will create jobs. It will transform lives by driving economic and social progress. Besides, banking on Kenya’s acclaimed recognition as a hub for fintech innovation, TFA will build on Kenya’s highly acclaimed reputation as a hub for fintech innovation and unlock new opportunities for businesses, consumers, and the society.

Like the hyenas, the fintech ecosystem needs an alliance to strength the community.

I cannot over-emphasise the benefits of FintechNGR and other silo associations will get when they form an alliance. Like TFA in Kenya, the Nigerian fintech ecosystem (if united) will break new ground. The alliance will foster faster growth for members. Innovation and development of the sector will drive economic and social transformation.

Like TFA in Kenya, this alliance will create a unified voice for the fintech ecosystem. It will advocate for key initiatives. It will position Nigeria as a global leader in financial innovation. It will be easy to lobby the government for policy formulation and regulatory. It will be easy to engage the government at all levels. Like the Bankers Committee, the fintech alliance will bring together a potpourri of innovation that will ensure consumer protection and financial stability.

Funding and scaling fintech startups will be easy. The established and incumbent will be able to scale their operations and achieve sustainable growth if the Hyenas Strategy is embraced.

In the short term

Like the hyenas, the fintech ecosystem needs an alliance to strength the community.

*Olaegbe (psalmsonolaegbe@gmail.com)

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Without funding, no matter the idea, the business is dead. Funding is the lifeblood of any business. Fintech is inclusive. However, despite the increase in investments, research indicated that access to late-stage and growth capital is a Herculean task for Fintech in Nigeria.

FintechNGR and Ernst & Young’s report showed that Fintech in Nigeria rely on external funding. For instance, Fintech firms in Nigeria have sourced investment from 20 countries across Africa, America, Asia, and Europe. The 57% of the Fintech firms attracted external funding. The other 52% got funds locally.

On the one hand

The whitepaper from McKinsey & Company in partnership with the World Economic Forum’s Future of Venture Capital initiative on The Future of Global Venture Capital initiative has identified an opportunity to strengthen the global venture capital ecosystem.

It captured the importance of the VC as the driver of Fintech development. It pointed out that obtaining funding from the VC is a challenge for many Fintech companies across regions. This is why. Where funding is needed is irrelevant to the VC. The interest of the VC leads. Do know the result? Innovative suffers. Businesses that require funding do not get it. What matters is the VC’s interest, not innovation. It is akin to putting your money where your interest lies.

On the other hand

Both local and foreign VCs play a crucial role in nurturing Fintech ecosystems. They help Fintech firms to scale. For instance, local investors bring an intimate knowledge of the domestic market. This allows the local VC to support homegrown Fintech start-ups that address local needs and challenges. Foreign investors usually contribute by providing a global perspective, extensive networks, and access to larger pools of capital. The whitepaper believed this collaboration is essential.

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In the long term

The US and Canada have the highest number of local Fintech funding. Research showed that the figure was above 85% as of 2023. Europe had 53.2%. Local investors made 36% of the investments in Asia Pacific (APAC), LAC, MENA, and SSA, while 64% came from foreign investors. The report identified five strategic pathways to close funding gaps and foster a robust Fintech ecosystem. Like a river, the funding saga runs through every region.

The Fintech industry’s expansion in the decade has aided innovation, inclusion, and growth in the financial services sector and the economy. But the funding challenge has been unabated. While VC plays a crucial role in financing waves of technological innovation, Fintech has ranked as one of the top sectors attracting a 12% share of all VC funding on average.

The global VC funding for Fintech firms has grown from $18 billion in 2015 to $92 billion in 2021. The low-interest rate environment and the pandemic-induced digitalisation were responsible for this growth. This growth, research showed reversed as geopolitical instability and rising interest rates dampened valuations. This led to a decline to $30 billion in 2023 – marking a 67% decrease from the 2021 peak.

Latin America and the Caribbean (LAC) have seen the highest compound annual funding growth at an annual average of 37% between 2015 and 2023, despite an 81% decrease since the 2021 peak. The Middle East and North Africa (MENA) had the second-highest growth rate for fintech VC funding between 2015 and 2023, with an annual average growth of 33%. As the global economy recovers and investor confidence returns, the Fintech industry will attract renewed interest and fuel the next wave of innovation.

In the short term

The balance between local and foreign investment varies. As a VC, feather your nest next.

*Olaegbe (psalmsonolaegbe@gmail.com)

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