By Emeka Anaeto
With the Lagos startup ecosystem valued at more than $6 billion, attracting almost $1 billion in FDI annually, FinTechs have the prospect of becoming the pivot of Nigeria’s economy.
In this interview Abimbola Pinheiro, Founder and CEO of O3 Capital Limited, says there are challenges ahead which require concerted efforts of all stakeholders to surmount.
How will you describe the growth of FinTech in Nigeria?
It has been fantastic. I believe outside of America and China, Nigeria should be in the top five of FinTech giants in the world. It has been amazing. It is as if finally the energetic minds of young Nigerians have been able to express themselves. And luckily the environment now enables such innovations and practice.
So, it has really been amazing. I mean, we have gone from finance to management, to investment. It’s truly unbelievable, frankly. And the good thing is that as a nation FinTechs can only help our economy. In the whole ecosystem, we have been lucky, the Central Bank of Nigeria (CBN) under this dispensation has been quite enabling. And the infrastructure is catching up, the telcos are growing bigger, the Internet provision is with more bandwidth. So, it is really a lot of things coming together and making it work.
One major challenge of FinTech players remains access to funds from local and foreign investors. How has this trend affected the growth of FinTechs in Nigeria?
I think the challenge is breaking by itself. I will say that there are not much local investors in FinTechs currently. Like you said, it is hard to convince Nigerians about this concept. We have had our own fair share of issues when people don’t understand what credit card is or how it works. But, we have had a few Nigerians dabble into it and that is not bad, and I am sure it will get better as time goes on.
But for the foreign investors, they have seen virtually all these concepts and innovations succeed everywhere else in the world. And what Nigeria has going for it is the population – 200 million. The foreign investors see the market and they are saying, ‘‘if this can work over there, it can work over here.’ There is no way it will not succeed. We need to take that gamble that bet. I believe that the same way we have gotten almost $600 million dollars investment in the last 7 years, which is huge, we will overcome similar challenges. I can say that the difficulty in raising funding before is getting easier these days. Now, investors are trooping into Nigeria and they have brought funds and looking for FinTechs to fund.
03 Capital Limited is one of the earliest FinTech companies in Nigeria; tell us about your company and your experience over the years?
O3 Capital Nigeria Limited is a financial services institution that offers various consumer loans using the credit card as its delivery channel. We are the first non-bank card issuer in Nigeria, and we aim to be the preferred credit card issuer for years to come.
Our credit cards work on the existing Interswitch network, which means they are compatible on all ATM, POS and Internet payment sites in Nigeria.
When we started about seven years ago, the idea of FinTech was very strange to the Nigerian market. Not many people knew what to do; even the regulators were not sure how to place us. So it has been a long journey. The market acceptance has been tough, the culture of credit card has been growing gradually in Nigeria, but now in 2021, there are more companies, which we can be compared with. People now understand the concept of FinTechs and cards and payment solutions much better. So the market is growing and is expanding accordingly.
As a player in the FinTech industry, what aspect of the market is O3 Capital pulling its weight on?Also, what is the mission and proposition of O3 Capital to customers?
03 Capital as a company has the saying, what we call a mission, “An 03 Card for everybody.” Every Nigerian should have a credit card. We, for instance, offer access to funds and convenience. We believe that no matter your status in life, there is an O3 card for you. O3 Capital is a financial supermarket, we offer prepaid card, we offer the credit card, and we also have other financial products. We say if you are a student, you can get a prepaid card, learn how to use cards and practice so when you have your card it makes it easier. With the credit card, young career holders, family men, executives, everybody needs something. One thing we say in 03 card is, ‘life happens.’ And what people need to understand is that for 03 Capital, an 03 card is not what you get when something happens to you. It is a life companion, so that when life happens you are ready. Whatever life throws at you, you are already. You take care of it and you don’t break your stride. That is what 03 Capital cards do, they give you that comfort. It is a life companion tool. It is not about loan or credit; it is actually life companion. With your 03 card, even if you don’t want to use the loan, we don’t charge you anything, the card is there in your pocket. And in some places, like airports and supermarkets, you get certain discounts and benefits by using an 03 Card. If you have money in the other bank, you move it to that card, and you get all those benefits.
FinTechs have developed solutions that address specific challenges. How can you describe the impact of such solutions on the financial industry?
We see 03 Capital as a bridge between the old brick and mortar banks and the future mobile or any kind of payment system. Because Nigerians have affinity to cash, the next thing to cash is card. At 03 Capital we offer credit card or prepaid card that works on any platform. We now have a mobile app that mirrors that card on your phone. So everything you can do on your card, you can do on your phone, including to transfer money, withdraw cash from the ATM, use a POS terminal, look at your balances, change your PIN, everything. It is that convenience that 03 brings to the fore for people.
So, in terms of innovations, 03 is like a financial supermarket, what some people will call a digital bank. Because we offer lending and saving services, we offer money management services, soon we will offer remittance services. And that is just the beginning. In the future we are going to expand these services to go global. So, Nigerians can take an 03 card from Nigeria and go anywhere in the world and get the maximum benefits available.
Industry players have called for closer collaboration between the FinTechs and the banks. Do you see the need for collaboration, and how best can the collaboration drive Nigeria’s digital economy initiative?
Well, for me as a person and at 03 Capital, we were at the forefront of this collaboration quest because everything is an ecosystem. No matter what you do, there is always someone that can add more value to it. FinTechs are more of the last man to get to the end user. For instance, we do cards and all that, but at the backend, money has to move from one bank to the other. So, if we don’t collaborate with the banks, it will not help.
The telcos are there providing services, we collaborate with them. You also know that our POS terminals will not work without the telcos. The truth is no single entity can be everything. Banks do wholesale banking, FinTechs like us do the retail to the end users, everybody wins and everybody makes their money. And the thing is that everybody is an expert in a certain area. I have told some banks in the past to leave retail banking to the retail experts. Some banks have tried to do some funny FinTech arrangements; they have not had good experiences. But at 03 Capital, we have default of less than 4%, which is amazing. This is because we know what we do, we know how to analyze our profiles, we know what algorithm to ask for. So, there is no way you will not collaborate. And it is only a matter of time really, because you can’t be everything. The telcos learnt this long ago.
Your company provides the average Nigerian with access to funds using the O3 cards; how does the card operate and how accessible is the card?
Like I said earlier, our motto is, ‘a credit card for everybody.’ All you need to do is download the app and apply for the credit card. We give limits between N100,000 and 5 million naira depending on your cash flow or your salary. And within 24 hours instantly you get that virtual card on your phone and you can start to do your transactions from there. In a day or two, you will get the physical card. You can now take this card and call our call centre to activate the card. Then you go to the nearest ATM to change your PIN. That card is with you for two years. You don’t need to call us; we don’t need to see you. As you spend, we charge interest, if you don’t spend, there will be no interest. For example, we give you a card of N100, 000 and you spend N50,000, we will only charge you interest on that N50,000 and it is not a flat rate.
If you use that card for two weeks, that’s 14 days, we charge you interest only for 14 days on that N50,000 and we charge at 0.013 percent per day. So, it is very, very cheap and convenient, it is cheaper than loans. A lot of people don’t realise that the credit card is actually cheaper than loans. So, you have it, you pay it back, is in your pocket, you don’t use it again. You want to pay school fees, after three months, you take it to the school, pay your school fees and you move on.
And when you pay back, you don’t have to pay back everything you spent at the end of the month. You are allowed to pay back, only 10 percent of what you have spent. If you spend N50,000, you pay back N5,000; the N45,000 left you can roll over to the next month. If you have money, pay the whole thing down to zero and your interest will stop.
So, it is really a life companion. We all have emergencies, so we all need a credit card. We tell people that with 03 Card, you live a better life. And some of these things I say are personal experiences. We have had people that are sick and they don’t want to go to hospital because they have to pay for test. What will they do? They go to the pharmacy and buy any drug. But with your 03 Card, take the test, see the doctor, you pay it over two years. So, you have a better quality of life. Everything happens to everybody, for a man sometimes, you don’t have N50,000in your pocket. You can’t be asking colleagues and family for everything. Take care of your business quietly, even your wife would not know. It gives you a better quality of life. That is why our slogan now is ‘With 03 Card, live your best life’.That is how it works.
Most Nigerians are still skeptical about using debit cards for financial transactions because of the perceived online risks associated with it. How will O3 Capital convince such Nigerians and others to use cards for financial transactions?
The good thing about 03 Capital is that we are a licensed CBN Financial Institution. So there regulations we must to adhere to. We offer credit cards; the credit cards contain customer’s personal data and we adhere to the Know Your Customers (KYC) policy.
Also, there are some regulatory certifications and levels that you must attain before you are allowed to operate. There is the PCI, DSS, there is data security that deal with encryption. It is a long list and we are able to meet every criteria required of us. Our systems are firewalled against the Internet or hackers. For there to be fraud on our platform, a customer must have given somebody his password. The customer must have given his card and PIN to someone. Otherwise, there is no way they can hack into your mobile phone or mobile app, they can’t hack into it. We have been doing this for seven years and we don’t have one case of fraud. If that is not a testament of safety, I don’t know what is.
Despite the several channels open to Nigerians for financial transactions, coupled with CBN’s awareness campaigns to deepen financial inclusion, the Nigerian economy is still regarded as cash-based where most people prefer the use of physical cash. What is your take on this, and how can the narrative be changed?
It is going to take the collective efforts of all stakeholders – CBN, Banks, the FinTechs and the people. Because really cash is king and some of these doubts or lack of trust comes from the infrastructural challenges we have in Nigeria, which everybody understands. You go to the ATM, and they tell you no network, no POS, but you know you have money. But if the cash is in your hand, it is not going anywhere. So, it is only a matter of time, because if you look at CBN numbers, the volume of online or POS or e-transactions have more than tripled in the last few years. There are less cash in circulation now, so we are getting there and it is only a matter of time.
What other message do you have for your customers; just to assure them and those who are yet to come onboard the 03 Capital revolution?
I like the word revolution because that is what we use regularly here. The thing is if you join the 03 revolution, your life will never be the same. This is because a lot of things are there for you to do to take business opportunities. Most of us can’t afford the kind of schools we want our kids to go. But, if you save for three months, we can pay the school fees for you. You now downgrade your children’s school, for what? Take a our credit card, pay the school fees and pay us back over a three-month period. Just join the 03 Capital revolution then life will never be the same again, and those that have joined, you have not seen anything yet.
There are some massive things coming up; even when I think about it, I start to smile to myself. I know it takes a while, because even me, I didn’t have a credit card until I started working with 03 Capital. And the good thing about 03 Capital is that you don’t have to change where your bank is to get our card. Stay with your bank wherever it is, that is what 03 Capital offers;we offer freedom. There is nothing more important than financial freedom. We are different because if you collect a credit card from bank A, you must have an account with that bank. But with 03 Capital, you can have an account with any bank in Nigeria. We will give you a card, we have all the required process to ensure whether you are a good person, or not, your credit history and everything works.
I will say it again, seven years and we are still here, we must be doing something right.