Fintech companies like Opay and PalmPay were the biggest winners of 2024, gaining customers by offering more reliable transfers at a faster speed in a year plagued by bank glitches.

As traditional banks grappled with weeks of network outages, the amount transacted through mobile money apps increased by 69.58 percent to N79.55 trillion from N46.91 trillion in 2023, according to the Nigeria Inter-Bank Settlement System (NIBSS).

Since 2020, these transactions have grown by 2,507.94 percent. In volume, mobile money transactions jumped 28.74 percent to 3.92 billion in 2024 from 3.04 billion in 2023. The transactions have spiked by 2,846.32 percent since 2020.

The overall electronic transactions surged to N1.09 quadrillion in 2024, with instant transfers dominating at N1.08 quadrillion, a sign that banks still play a crucial role. Yet, fintechs are increasingly gaining ground as customers seek alternatives.

With banks struggling to keep pace with surging transaction volumes, Opay and PalmPay have become the most popular alternatives. By March 2023, Opay and PalmPay were Nigeria’s most downloaded finance apps. OPay was the country’s most downloaded app by October 2023.

Nigeria has 17 companies licensed by the Central Bank of Nigeria (CBN) as mobile money operators (non-bank-led), but OPay and PalmPay are the most prominent.

Chika Nwosu, PalmPay’s managing director, recently noted that the fintech, with 35 million customers, has over 16 million active monthly users and a 99.5 percent success rate on transfers. Opay, with over 30 million users, has attributed its success to IT investments. It explained that its agile IT network allows rapid capacity expansion, surpassing traditional banks’ capabilities.

“They made payment methods easier, faster, and better, and people began relying on them for everyday things,” noted Adedeji Olowe, founder of Lendsqr.

Some Nigerians say they turn to banks only when the chips are down. In October 2024, several traditional banks underwent systems upgrades, shutting out many of their customers from transfers.

“I had to download PalmPay when my bank app wasn’t opening a while ago,” said Temiloluwa Abdulrazak, a Lagos-based trader.

Olamide Eniola, a civil engineer, stated, “I opened an Opay account after I couldn’t access my salary for almost a week in 2023. Since then, I have had the account, but I basically use it for everyday transactions.”

Lolade Akanji shared, “My GTBank app wasn’t working for a while, which forced me to open an OPay account. I don’t want to go through that experience again.”

According to Bolaji Akinboro, chairman of Voriancorelli and co-founder of Cellulant, “Most Nigerians now have a wallet from Opay or another neobank. When the banks went down, those with money in their wallets could conduct peer-to-peer transactions within the same ecosystem.”

Banks are aware that the growth of electronic transactions by 293.94 percent since 2021 has strained their digital infrastructure. The World Bank attested to this when it noted that the country’s attempt to go cashless in late 2022/early 2023 failed because of inadequate digital infrastructure.

“Nigeria’s digital infrastructure is inefficient and costly,” Olugbenga Agboola, chief executive officer of Flutterwave, said in an article entitled, ‘Nigeria’s Budding Digital Economy: Coping with Disruptive Technology.’

In response, banks are investing in their digital infrastructure to close this gap and prepare for an entirely cashless economy. Five banks plan to invest N248.21 billion in technology upgrades this year. “The upgrades will improve banking capacity and cope with increased online banking demand,” said Olowe of Lendsqr.

“The future of banking is digital,” emphasised Olusegun Alebiosu, the chief executive officer of First Bank, at the 6th First Bank Fintech Summit. (BusinessDay)