Follow Us on Google
By Olamide Michael
The global fintech revolution has created an unprecedented opportunity for financial inclusion, particularly for the underserved and unbanked populations. But while much of the fintech industry’s narrative has been shaped by the image of “serving the underserved,” there’s an emerging shift in focus – One that moves beyond the myth of the underserved user and towards sustainable, long-term market growth.
To gain industry oversight, the concept of the “underserved user” in fintech has often been defined by the absence of traditional financial services like bank accounts, credit access, and insurance.
According to the World Bank, over 1.4 billion adults globally remain unbanked as of 2023, with a significant proportion residing in emerging markets like Nigeria and sub-Saharan Africa. In the early stages of fintech, companies identified an opportunity to provide digital financial services to these groups by leveraging mobile technology, alternative credit scoring, and digital wallets. Nigeria, for instance, has seen a surge in mobile money users, growing from 6 million in 2015 to over 47 million in 2023, thanks to fintech solutions such as OPay and Paga.
For years, the focus was clear: reach the “unbanked” or “underbanked” segment that constitutes large volumes by offering low-cost, accessible financial products. While this narrative helped fuel the fintech industry’s rapid growth, it also unintentionally created a limited vision of the market – One that focused heavily on filling a perceived gap, rather than on nurturing a broad and diverse user base that could support sustainable, scalable growth.
Beyond the underserved segment, a broader and more inclusive vision was envisaged by industry leading lights through democratisation of access to financial services. The myth of the “underserved user” is becoming increasingly irrelevant as fintech matures. The market for digital financial services is much larger, more nuanced, and more complex than initially envisioned. Fintech companies are realising that while there is still great potential in reaching populations without access to traditional banking, the real opportunity lies in expanding the scope of their offerings to serve a wider array of users. Rather than focusing solely on the “underserved,” fintech companies are now recognising the importance of:
Middle class segment in emerging markets, with increasing disposable income, are becoming a key demographic for fintech companies. The emerging middle class in Africa is expected to grow by 50% by 2030, according to McKinsey & Company. These consumers may already have access to banking services but are looking for more flexible, tech-driven alternatives – whether that’s for payments, investments, savings, or loans.
Firstly, the future of fintech lies in building products that appeal not just to the underserved, but also to more established users. This could mean offering digital banking services, investment platforms, and insurance solutions tailored to the unique needs of both the emerging middle class and the digitally native younger generation, who may already be financially literate but seek more convenient or personalised options.
Secondly, cross-sector integration as the fintech ecosystem matures, it will increasingly be integrated with other sectors, including health, retail, real estate, and more. Consumers will expect a seamless financial experience that connects all aspects of their lives. Companies that innovate with cross-sector partnerships will see the greatest growth in this expanded market.
Digital solutions for Small and medium-sized enterprises (SMEs) are often overlooked in traditional financial services, despite representing the backbone of many economies. SMEs account for 48% of Nigeria’s GDP and employ 84% of the workforce. As fintech companies begin to offer credit, payments, and accounting solutions tailored for SMEs, they will tap into an underserved yet highly promising market that can unlock tremendous growth.
In addition, focusing on sustainable market growth in order to transition from the “underserved user” myth to sustainable growth, fintech companies must focus on the following:
Building Scalable, User-Centric Products
Fintech companies need to focus on designing products that are scalable, user-centric, and built to grow with their customers. For example, Paystack, acquired by Stripe for $200 million, expanded from basic payment solutions to offering services for enterprise clients across Africa. This means thinking long-term about customer retention and loyalty, rather than just acquisition. Sustainable growth is driven by the ability to adapt to users’ evolving needs, whether that’s by providing more sophisticated products as they grow wealthier, offering personalised advice, or integrating features that anticipate future financial demands.
Embracing Data and AI for Personalization
Data analytics and artificial intelligence (AI) are critical for the next phase of fintech growth. The global fintech AI market is expected to grow at a 20.5% CAGR between 2023 and 2030. The ability to analyze large amounts of data not only helps companies improve customer acquisition strategies but also enables them to deliver highly personalized products. This can range from tailored credit scoring models, to customised insurance plans, to investment strategies based on an individual’s financial goals. Personalization ensures that fintech companies can serve users with varying needs and income levels, extending beyond the underserved to a broader market.
Diversifying Revenue Streams
Rather than relying solely on attracting “underserved” customers, fintech companies can look to diversify their revenue streams by offering premium services, subscription models, or partnerships with banks and other financial institutions. Many fintechs are starting to see the value in expanding beyond basic services and offering value-added solutions, such as wealth management, business loans, or cross-border payment solutions. Diversified offerings allow fintechs to serve a broader market and tap into more lucrative segments.
Partnerships and Ecosystem Building
No fintech company can thrive in isolation. In the push for sustainable growth, fintechs need to build and participate in ecosystems—working with banks, regulators, tech companies, and other service providers. Strategic partnerships allow fintechs to scale more rapidly, improve user trust, and mitigate regulatory and market risks. The fintech sector is growing increasingly competitive, and creating partnerships with other players in the ecosystem is key to gaining a competitive edge.
Financial Literacy and Consumer Education
To ensure sustainable growth, fintech companies need to go beyond offering products and invest in financial literacy and consumer education. By helping users better understand financial concepts – such as savings, investments, credit, and risk management – fintechs can increase their customers’ financial confidence and enhance customer retention. Only 39% of Nigerian adults are financially literate, according to EFInA. This is particularly important for the emerging middle class and digitally native younger generation, who may be more willing to adopt innovative financial products but need guidance in how to use them effectively.
Sustainability and social impact is an integral part of operations. As the fintech industry matures, there’s a growing recognition of the importance of aligning business goals with social and environmental sustainability through Environmental, Social and Governance (ESG) parameters. In fintech, ESG involves practices and policies that promote sustainability, ethical behaviour, and good governance. This includes reducing carbon footprints, promoting financial inclusion, and ensuring transparency and accountability. 25 Jun 2024 Beyond offering financial services, fintech companies that embrace ethical lending, green investments, and responsible financial practices will attract a more conscientious consumer base. This commitment to social responsibility, alongside profitability, will drive long-term loyalty and create positive brand value in the market.
In a nutshell, the future will be defined by a more inclusive and sustainable fintech ecosystem. The myth of the “underserved user” is increasingly being replaced by a broader, more inclusive vision that sees fintech as a tool for empowering all consumers from the unbanked to the emerging middle class and beyond. Moving beyond the initial focus on underserved populations, fintech companies like the five unicorns—Flutterwave, Andela, OPay, Interswitch, and Jumia—and other over 250 fintech startups produced in Nigeria. The sector is poised to generate $543 million in revenue by 2025, making it one of the fastest-growing fintech hubs globally. now have an opportunity to build sustainable, scalable business entities by catering to the diverse needs of a growing, more financially engaged global population.
The path forward for the fintech industry will be defined by its ability to balance innovation with inclusivity, personalisation with scalability, and profitability with social impact. Those that can adapt to an evolving market, create user-centred products portfolio, and integrate into wider financial and technological ecosystems will be the ones to thrive in the next chapter of fintech growth. Nigeria is not lagging behind as five unicorns have emerged from Africa’s most populous nation and it is a leading light across the technology and innovation ecosystem with positive results and potential for greater heights on the horizon.
