Providus Bank: The Bank Supporting Fintechs in Nigeria
Large incumbent banks in Nigeria are understandably concerned about the potential impact of the disruptive business models that fintechs bring to the banking ecosystem. Fintechs are closer to customers, understand customers changing preferences, and solve specific customer problems better than incumbents. Fintechs can be viewed as a wasplike threat, and there are various approaches being adopted by the big banks to address them. Some of the big banks are ignoring fintechs altogether and still focusing on their business as usual; others are trying to stamp out local fintechs by building their own in-house fintech subsidiary. And then, other banks meet somewhere in between, launching their own banking products that meet some of the needs that fintech products are meeting.
We speak to Walter Akpani, Managing Director and CEO at Providus Bank, which has taken on the unique approach of collaborating with fintechs to gain market share. Founded in 2016, Providus Bank has positioned itself as a digital-first institution, with a focus on providing innovative financial services that meet the needs of modern consumers.
On Providus Bank’s approach, Walter elaborates, “We provide banking-as-a-service platforms supported by APIs. In choosing this approach, we are clear about the role of a bank in the ecosystem and what the role of fintechs are, and we have found a way to collaborate and compete – a bit of co-opetition with fintechs in a mutually beneficial partnership.” Walter says that this approach keeps Providus Bank in the forefront of innovation in the Nigerian banking industry, and benefits them as they are considered the “go-to-bank” for entrepreneurs looking to build their fintech business in Nigeria.
Providus Bank has a long list of powerful Nigerian fintech companies banking with them, including Piggyvest, Flutterwave, Teamapt, NowNow, and Paystack. Walter provides us with a few examples of these co-opetitors and how they work together.
Piggyvest
Piggyvest, one of Nigeria’s prominent online savings platform, partnered with Providus Bank to fulfil their operational needs. Piggvest requires digital solutions to serve its retail customer base which subscribe to Piggyvest’s savings products, because the fintech has no physical presence, like bank branches. Walter explains, “we provided a collection solution via API to Piggyvest that allows them to receive savings deposits easily and reliably, from their customers. The ease of making and receiving payments by their customers supported their growth strategy and helped Piggyvest scale up.
NowNow
When NowNow launched their Agent Banking product in 2018, Providus Bank was there to help them start and scale up this business. “Providus provided POS terminals, settlement services, and we sponsored NowNow for the issuance of debit cards that are attached to the wallets of their customers.” Walter continues, “we also provide BIN ranging services that allow fintechs to issue cards to their customers within a short period of time.” NowNow have raised over US $13 million in funding, and are currently fundraising their Series A.
Related: NowNow Reimagining Fintech in Africa
Paystack
Providus also supported Paystack to scale up through Providus’ MPGS (Mastercard Payments Gateway Services) for web payments services by being the sponsor bank. The fintech had raised US $10.4 million, prior to being acquired by Stripe in 2020 for over US $200 Million.
Related: Meet the Fintechs Dominating Africa’s Unicorn List
Providus Bank has also provided disbursement services via API to many other fintechs including fintech unicorn, Flutterwave, and TeamApt. TeamApt has raised over US $85 million, after closing its Series B in Q3 2022.
When I ask Walter what his take on fintechs are, and their current role in the Nigerian banking ecosystem, he says “it is our view that Fintechs have come to stay as significant players in the financial services ecosystem. They solve real problems that incumbents are too slow to address, and they are quick at responding to customers’ changing preferences. They are also well-funded. However, I also think most fintech founders are technology-focused and would do even better to build teams around them for improved corporate governance and regulatory compliance.”
I ask Walter if Providus Bank have to be discerning with regards to which Fintechs they partner with. He responds, “if they’ve built a solution, we give every fintech an opportunity to build their dream. We don’t spend much time trying to evaluate the viability of the solution.”
Another key aspect of Providus Bank’s approach to fintech is its emphasis on innovation. The bank has made a point of seeking out and partnering with fintech startup that are working on cutting-edge technologies and solutions. This has allowed Providus Bank to stay at the forefront of the industry, offering customers access to the latest financial services and technologies.
Walter elaborates on their innovation philosophy, “where we feel that there is an opportunity for an innovative solution and there is no fintech currently close to building this solution, we usually build in-house or co-create with a fintech that feels there is an opportunity in that space.”
Providus Bank has also been proactive in developing its own proprietary fintech solutions. In 2019, the bank launched its own digital lending platform called Quick Credit. The platform allows customers to apply for loans of up to N2 million ($5,500 USD) without the need for collateral or a guarantor. The loan application is entirely digital with customers able to apply and receive a decision within minutes.
Of course, Providus Bank also walks the talk by ensuring that it too leverages technology to create a seamless and convenient banking experience for its customers. The bank has invested heavily in its mobile banking platform, which allows customers to perform a range of transactions from basic account management to more complex financial services – all from the comfort of their smartphones. The mobile banking app is designed to be user-friendly, with a simple and intuitive interface that makes it easy for customers to access the services that they need.
The Bank also participates in financial literacy programs organized by the Central Bank of Nigeria, where Providus Bank goes to schools to teach pupils about personal finance. “We also make a significant contribution to financial inclusion by providing digital channels – like POS terminals to fintechs that have enabled them to make progress towards reaching the unbanked population. The point-of-sale (POS) terminals is pivotal to agency banking in Nigeria.
