Fintech companies are constantly founded in countries all over the world and Nigeria is not left out in the fintech startup boom.
The recent boom could be attributed to the attention and success of those who ventured into fintech.
These fintech solutions solve varying needs for people, some offer payment gateways, some money lending services, others investment platforms, betting platforms, and fundraising services among others.
There are a lot of factors to consider before setting up a fintech startup in Nigeria. There are regulations, policies, guidelines to adhere to, and licenses to acquire.
Factors to consider before setting up a fintech startup:
This is where you decide the type of particular problem your startup will solve in the financial industry and then build your Fintech to solve the problem.
There are three major Fintech Niches, Data Management Category, Fund movement, and Fund placement.
These three fintech niches solve and provide different financial services.
Data Management Fintechs are concerned with helping other financial institutions manage their clients’ information, making informed and insight-considerate decisions with data collected.
Fund movement Fintechs are Fintechs that provide payment gateways services thereby making financial transactions easy and seamless no matter the distance between participants. Their service offering includes remittance, payment solutions among others.
Fund placement Fintech, this Fintechs solves investment, saving issues providing their clients varying investment and savings plans. Fund placement Fintechs also offer lending services.
Develop a Business Plan and Strategy
The role of having a business plan and strategy cannot be overemphasized. With a business plan, you would be able to know the amount it would cost you as capital for your startup and you can then strategize how to enter the market and thrive.
The following things are put in perspective when you develop a business plan, the executive summary, an overview of both the business and market, the market competition, and shortcomings of the current market.
Then from the above, you can design a model that will influence your Fintech startup development and service offering.
Regulatory Bodies and Guidelines
Fintech and other financial institutions have regulatory Bodies and guidelines that ensure there’s a standard maintained by the various financial institutions.
As an intending player in the field, it is expected that you familiarize yourself with both regulatory bodies and their guidelines;
- Central Bank of Nigeria
- Security Exchange Commission
- Nigerian Deposit Insurance Corporation
- National Insurance Commission
- National Information Technology Development Agency
- Federal Competition and Consumer Protection Commission
Guidelines and Regulations
The listed guidelines and regulations were put out by the various regulatory bodies and hence anybody in the fintech industry should get acquainted with them.
Below are some of the regulations and guidelines of the Central Bank of Nigeria for Fintech Companies;
- Central Bank of Nigeria Microfinance Policy, Regulatory and Supervisory Framework, 2011
- Central Bank of Nigeria Revised Guidelines for Finance Companies in Nigeria, 2014
- Central Bank of Nigeria Guidelines on International Money Transfer Services in Nigeria, 2014
- Central Bank of Nigeria Guidelines on Mobile Money Services in Nigeria, 2015
- Central Bank of Nigeria Guidelines on International Mobile Money Remittance Service in Nigeria, 2015
- Central Bank of Nigeria Guidelines on Operations of Electronic Payment Channels in Nigeria, 2016
- Central Bank of Nigeria Regulation for Bill Payments in Nigeria, 2018
- Central Bank of Nigeria Regulatory Framework for the Use of Unstructured Supplementary Service Data (USSD) Financial Services in Nigeria, 2018
- Central Bank of Nigeria Guidelines for Licensing and Regulation of Payment Service Banks in Nigeria, 2018
- Central Bank of Nigeria Regulation on Electronic Payments and Collections for Public and Private Sectors in Nigeria, 2019
Registrations and Licenses
Furthermore, the Fintech must obtain a license and be registered before it discharges its duties:
Corporate Affairs Commission(CAC) Registration
The CAC regulates the incorporation of companies and official record-keeping for these companies in Nigeria. The Fintech must first be registered with CAC to enable the fintech to be acknowledged as a company in Nigeria.
After this registration, Fintech can then apply and register with the various Regulatory bodies mentioned in this article.
The Central Bank of Nigeria is in charge of issuing licenses of operations to Fintechs and other financial institutions in the country.
The license is Payment Service Providers and it is in three categories, Basic, Standard, and Super license. A fintech startup can choose any category that suits its purpose.
Chibuzor Elizabeth Chijioke a graduate of Abia State University is a Nigerian-based entrepreneur and content writer. She trained as a digital marketer at Innovation Growth Hub. She is committed to teaching people how to apply technology to better their lives and businesses. She spends her leisure reading sci-fi and fantasy novels.
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