Fintech Surge: Nigerians Shift to Digital Payments as Banks Struggle with Outages

In 2024, fintech companies like Opay and PalmPay saw significant growth as they became the go-to alternatives for financial transactions, particularly in a year when traditional banks faced frequent network outages. The rise of fintech companies has been particularly evident with mobile money transactions reaching N79.55 trillion in 2024, a dramatic 69.58% increase from the previous year. This surge reflects the growing preference for faster, more reliable digital payment solutions compared to the challenges faced by banks.

Mobile money transactions have witnessed explosive growth, increasing by 2,507.94% since 2020. In addition to financial volume, the number of mobile money transactions rose by 28.74%, totaling 3.92 billion in 2024. These figures highlight the rapid shift from traditional banking to digital finance platforms, with fintech companies like Opay and PalmPay becoming household names in Nigeria’s mobile money ecosystem.

While mobile money apps dominate the digital payment scene, banks are struggling to keep up with the demand for electronic transactions. As Nigeria’s banking infrastructure faces growing strain, fintech companies have capitalized on this gap, offering seamless and quick services. The increasing reliance on instant transfers, which reached N1.08 quadrillion in 2024, highlights the importance of efficient digital infrastructure. Traditional banks, meanwhile, have been grappling with network glitches and prolonged service interruptions.

Fintechs like Opay and PalmPay are now among Nigeria’s most downloaded finance apps. As of October 2023, Opay was the country’s most downloaded app, while PalmPay boasted 35 million customers, 16 million of whom were active users. These companies have become synonymous with reliability, offering a 99.5% success rate for transfers. Nigerians have turned to fintech solutions not only as an alternative but also as a more dependable way to handle daily financial transactions.

Acknowledging the strain on their infrastructure, Nigerian banks are investing heavily in technology upgrades to cope with the increasing demand for digital services. With a projected N248.21 billion earmarked for technology investments this year, banks are seeking to strengthen their digital capabilities in preparation for an entirely cashless economy. Despite this, fintech companies continue to outpace banks in terms of customer satisfaction and transaction volume.

Source: Business day