Embedded Finance in Nigeria: What it is. How to Get it Right

Embedded Finance in Nigeria: What it is. How to Get it Right

Embedded Finance in Nigeria

Picture this: You’ve selected a product on Jumia, added it to your cart, and when you’re ready to check out, you’re redirected to your traditional bank’s website, or even worse, instructed to visit a physical bank branch to finalize your payment. That’s the power of embedded finance.

It does sound stressful, doesn’t it? Now, imagine a simpler scenario – you click “checkout,” enter your details and walk away with your purchased product without any hassle. That’s the importance of embedded finance. It makes your financial transactions smoother and more convenient using super-fast and sophisticated finance APIs.

To add to it, APIs, or application programming interfaces, are sets of definitions and protocols that allow different software applications to communicate with each other. They are a way for two or more computer programs to talk to each other. APIs are used to expose data and functionality to other software applications. Nearly all the FinTech in the world leverage on APIs to function.

In this article, we will delve into what it’s really about, the major players in the field and how you can leverage this technology to improve your business or service.  

What is embedded finance? 

Embedded finance is the seamless integration of financial services like lending, payment processing, or insurance into non-financial businesses’ infrastructures. It helps eliminate the need to redirect to traditional financial institutions, making it convenient for customers.  

In Nigeria, the market for embedded finance is expected to exceed $8 billion by 2029, presenting an opportunity to improve financial inclusion, especially considering the country’s smartphone penetration rate of over 50%. 

Embedded Finance Solutions in Nigeria

Embedded finance solutions are enabled by BaaS (Banking as a Service) providers are companies that help other businesses, even those not in finance, to add banking and financial features to their products or apps. Like your checkout page on Jumia or your pay-for-ride on Bolt. They provide the necessary technology and tools to make this integration possible. 

Some of these BAAS companies offer a range of solutions, with some providing multiple services while others focus on niche roles. Here are the three major solutions highlighted: 

  1. Mobile Payment Apps: Apps like Moni and Paga offer users the ability to make payments, transfer funds, and access basic banking services directly from their smartphones, enhancing the speed and convenience of financial transactions. 
  1. Digital Wallets:  Digital wallets like Flutterwave and Paystack have become popular for their secure money storage and online payment capabilities, reducing the reliance on physical cash. 
  1. Online Banking Platforms: Traditional Nigerian banks have invested in online banking platforms, empowering customers to manage their accounts, pay bills, and even apply for loans from the comfort of their own homes. 
  1. Buy Now Pay Later (BNPL): A financing option that allows consumers to purchase goods and services and pay for them in instalments, often without interest. BNPL providers typically partner with merchants to offer their services at checkout. When a consumer chooses to use BNPL, they are creating a short-term loan with the BNPL provider. The BNPL provider then pays the merchant in full, and the consumer is responsible for repaying the loan to the BNPL provider in instalments. 

Top 9 Brands Leading the Way in Embedded Finance in Nigeria

The following brands are at the forefront of the embedded finance revolution in Nigeria, each offering unique solutions to enhance the overall financial experience for individuals and businesses in the country. They include; 

Mono 

An embedded finance startup that provides a set of APIs that allow businesses to integrate financial services into their own products and platforms. This includes services such as account opening, card issuance, payments, and money transfers. 

Here are some examples of how businesses are using Mono to embed finance: 

  • A fintech company is using Mono to power its new buy now, pay later (BNPL) product. 
  • A social commerce platform is using Mono to allow its users to make payments directly within the app. 
  • A neobank is using Mono to offer its customers a seamless account opening experience. 

Mono is still a relatively new company, but it has quickly become a popular choice for businesses that want to embed finance into their products and platforms. It is known for its easy-to-use APIs and its focus on providing a good developer experience. 

Here are some of the benefits of using Mono for embedded finance: 

  • Speed: Mono’s APIs are fast and reliable, which means that businesses can integrate financial services into their products and platforms quickly and easily. 
  • Flexibility: Mono’s APIs are flexible enough to meet the needs of a wide range of businesses, from startups to large enterprises. 
  • Security: Mono is committed to security and compliance. It uses industry best practices to protect customer data and prevent fraud. 

If you are a business interested in embedding finance into your products and platforms, then Mono is a good option to consider. It offers a wide range of features and benefits that can help you get started quickly and easily. 

Kora

Kora is a payment service trusted by both local and global brands and offers a range of payment solutions, including easy payment acceptance and efficient payouts to local bank accounts and mobile wallets.  

Kora also provides APIs and documentation for developers to integrate payment solutions into their workflows. Available in various countries, Kora is a dependable and secure payment infrastructure, that promises to enhance payment processes and improve the overall experience of your customers.  

Anchor

Anchor is a powerful platform designed to empower and support African businesses to create and launch financial products quickly and seamlessly. Anchor offers a comprehensive suite of banking products that includes account creation (deposit, savings, and virtual accounts), KYC and onboarding solutions, instant money movement and payment options, debit card issuance, and savings and investment products. 

They handle compliance, back-end infrastructure, and bank relationships, streamlining the development and launch process. Anchor’s API documentation, developer tools, and flexibility make it fully customizable to suit customer needs.  The developer experience is designed to be user-friendly, allowing for the quick engagement of customers with new financial features through APIs, dashboards, webhooks, and SDKs. 

Okra 

Okra,  emphasizes six core products and their use cases:  

  • Identity (KYC profiles) 
  • Income (financial management) 
  • Payments (payment collection) 
  • Balance (real-time balance information) 
  • Transactions (transaction history): and  
  • Authentication (financial credentials validation). 

Okra’s API allows businesses and developers to access data from various financial institutions in Africa, with extensive coverage in Nigeria and beta access for Kenya and South Africa.  

Seerbit alpha 

SeerBit provides pre-built payment modules to expedite time-to-market, enabling businesses to seamlessly integrate financial services into their existing platforms.  

This includes payment processing, allowing customers to manage their money without leaving the platform. They offer various payment modules, including remittance solutions, virtual account systems, payment gateways, and digital banking options.  

SeerBit is licensed by the Central Bank of Nigeria and it serves a range of industries, including financial institutions, marketplaces, telecommunications, travel, and global payment processors.  

Jumo

JUMO offers real-time fund access with low operating costs, enabling partners to extend loans, savings, and various financial choices to a broader customer base.  

JUMO’s platform consists of two essential components: 

  • Core technology: which provides cutting-edge banking infrastructure; and 
  • Unify; is a learning machine that reduces lending costs and risks through data analysis. 

JUMO employs artificial intelligence and machine learning to create accurate credit scores and tailored financial products for millions of individuals and small businesses by disbursing billions in funds.

Maplerad 

Maplerad recently secured a $6M seed round led by Valar Ventures. They offer banking-as-a-service infrastructure, allowing you to embed robust financial services into your product seamlessly.

Maplerad handles compliance, bank relationships, and licensing, freeing you to focus on innovation. Their services include money movement, card issuing, virtual and physical bank accounts, and currency conversion APIs. They enable fast growth without the complexities of banking relationships and regulatory compliance.  

Onepipe 

OnePipe helps businesses issue bank accounts, launch credit products, process payments efficiently, and drive financial inclusion. They offer solutions tailored to various industries, including FMCG & Retail, Travel & Mobility, and Banking & Fintech. 

Their approach allows you to choose between API integration or prebuilt products for specific use cases, simplifying complex infrastructure. They provide virtual accounts, credit facilities, and payment execution through APIs.  

Bloc 

Bloc offers banking services for passionate founders and business owners. They provide business banking solutions with features like easy account setup, streamlined deposits and settlements, team collaboration, efficient transfers, virtual Naira and Dollar cards, bill payment with cashback, payment links, POS terminals, and developer-friendly APIs.

Bloc simplifies banking with zero minimum balance, zero account opening fees, and zero account maintenance fees. They ensure the security of your money through bank-grade security standards and 2-factor Authentication (2FA).  

Incorporating Embedded Finance Into Your Business?

Here are the three major ways you can integrate Embedded Finance Infrastructure:

In-House Development 

You can choose to build your Embedded Finance infrastructure internally, using your company’s own talent and resources. This approach allows for full control over the development process and customization to specific needs. However, it can be time-consuming and resource-intensive. 

Third-Party Purchase 

 Alternatively, you can opt to purchase the entire Embedded Finance solution or specific components from a third-party provider. This involves licensing technology and services. While it offers a ready-made solution, it may not be as tailored to the business’s unique requirements. 

Partnering with Embedded Finance Companies  

Partnering with specialized Embedded Finance companies, like the ones mentioned above helps you leverage the expertise of these firms and significantly reduces the time to market.  

Why Should You Consider Embedded Finance for Your Product?

Nigeria is a rapidly evolving hotbed, where technology continually advances and new customer demographics like “digital consumers” seek improved, more accessible, cost-effective, and convenient services. This fact has made embedded finance a pivotal solution for many businesses.

Conclusion

By integrating financial services into platforms like yours it enhances user convenience which helps to boost profits and gain deeper insights into customer behaviour. 

Whether you’re a startup, an established business, or a financial institution, staying up-to-date with these changes is crucial to meet your customers’ evolving expectations. 

Experts have already estimated that the embedded finance market is currently valued at $3.5 trillion and is projected to reach $7 trillion by the year 2030. And when you consider the ongoing innovation in technologies like blockchain, the future of financial services is even more promising and unpredictable. Who really knows what the future may hold?  

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