The phenomenal growth seen in Nigeria’s fintech sector extends beyond the influx of funds. In the previous year, the country reportedly had the highest number of fintech app installations in Africa.
This is according to AppsFlyer, the global marketing measurement leader, in their new State of Finance App Marketing Report.
According to the report, fintech app installation increased by 160 percent from the second quarter of 2020.
However, Nigeria was not alone in experiencing rapid growth; other countries in the Sub-Saharan African region also experienced rapid growth. Kenya experienced a 100 percent increase, while South Africa saw a 52 percent increase during the same time period.
1. The Digital Boom Fueled Growth:
The significant increase in fintech app downloads has been attributed primarily to the digital acceleration caused by the COVID-19 pandemic.
Financial activity, which initially declined at the start of the pandemic, subsequently increased as finance app installs increased in H2 2020 and continue to bear fruit well into the first quarter of 2021.
In Nigeria, in particular, the large unbanked population (56 percent) and difficult regulatory conditions pushed a large number of people to turn to apps to take out loans and explore other financial services.
2. Marketing Rise:
Another major contributor to the boom is the increase in marketing in the fintech industry. Since the start of COVID lockdowns in Q2 2020, the number of finance apps investing in marketing has increased across the board.
Market spending in Nigeria increased the most in Sub-Saharan Africa, increasing by a whopping 150 percent since the second quarter of 2020. The country’s Cost Per Install (CPI) has increased by 70% since Q2 2020, causing a surge in spending, particularly in Q1 2021, when budgets nearly tripled.
South Africa has also seen a significant increase of approximately 33% since the first quarter of 2020. On the other hand, Kenya has been abandoned by investors, with spending dropping by more than 80% in the last two years.
According to the report, Sub-Saharan Africa’s high spending was driven by fierce competition as apps used aggressive marketing tactics.
3. Apps for Lending and Investing are on The Rise:
The installation to registration conversion rate in Sub-Saharan Africa is impressive across categories, but loan apps have the highest.
According to the report, loan apps have a 69 percent conversation rate, while investment apps have a 25 percent conversation rate and financial services have a 19 percent conversation rate.
This demonstrates that loan and investment apps are more appealing to Nigerians than any other type of fintech service. This is evidenced by the popularity of loan apps like Branch, Carbon, and OPay, as well as investment apps like PiggyVest, Thrive Agric, and Cowrywise, as well as cryptocurrency investment apps like Yellow Card, Bundle, and BuyCoins.
In general, the report confirms analyst predictions that fintech adoption in the region is increasing. Despite a relatively lengthy registration process, 25 percent to 35 percent of users who install finance apps across the region demonstrated a strong intent to perform a financial activity after completing the registration.
4. Finance App Demand is at an all-time high:
The global demand for finance apps is out of control, not just in Africa. 29 of the top 40 finance markets (based on app installs) experienced year-on-year growth of at least 20%. The number of installs, however, was dominated by developing markets.
The average number of downloads in developing markets was 70% higher than the average in developed markets, with India, Brazil, and Indonesia accounting for nearly half of all downloads globally.
Like in Africa, Covid and increased market spending drove the majority of this market growth. According to the report, the number of remarketing conversions tripled globally between Q1 2020 and Q1 2021, with total spend reaching $1.2 billion in Q1 alone.
5. Increased Incoming Investment:
Over the last two years, the fintech sector has led the way in terms of VC investment into the region. The large numbers that are frequently reported indicate that these fintech solutions are reaching a large portion of the region’s population.
These enticing figures act as an aphrodisiac, luring more investors to the region. Paystack and Flutterwave are perfect examples of companies that have already made a name for themselves in the market.
In summary, the COVID-19 pandemic has accelerated the global adoption of financial technology, particularly in emerging markets.
Several finance apps have emerged, allowing millions of consumers and businesses to stay connected.
The rapid growth in the first quarter of 2021 alone indicates that the trend is likely to continue, and understanding how to best market their apps will be critical for African fintech to expand its customer base.
However, in countries like Nigeria, where regulations change frequently, FinTechs must be flexible and innovative to stay ahead of the curve.