Amid the financial inclusion drive, 63% of Nigerians prefer fintech apps to traditional banks

There has been an ongoing debate for quite some time about which is better: bank apps or fintech apps. Many individuals have voiced their opinions on this matter. Do we really need this myriad of fintech apps? Aren’t bank apps sufficient?

This discussion peaked earlier this year, during the naira scarcity. It seemed as though our traditional bank apps were ill-prepared for the situation’s intensity. While not all bank apps malfunctioned during that time, some fintech apps came to customers’ rescue.

In 2021, Technext reported that the fintech app installation saw an impressive growth of 160% from the numbers in the second quarter of 2020. A breakdown showed that loan apps were the highest at 43.3%. Financial services followed at 35.6% while investment apps saw just 20.3% growth.

After conducting thorough research, we discovered an interesting trend regarding financial apps available on the Apple Store. The top 5 apps in the finance category, all belonged to fintech companies, while the first app belonging to a traditional bank appeared at number 14.

This indicates that fintech apps dominate the download charts in this particular category. A similar scenario unfolds on the PlayStore, where fintech apps also claim the top spots in the finance list.

Read also: Why your bank apps are malfunctioning and ‘won’t stop soon’

However, our investigation didn’t stop at scrutinizing the stores of mobile devices. We engaged with numerous individuals who have experience using various financial apps, including both banking and fintech apps.

Out of 30 individuals asked, 63.33% are in support of fintech apps while 36.67% still prefer banking apps.

Interestingly, the banks that emerged as the preferred choice for these individuals were not the most popular on the app stores. It seems that personal preference and satisfaction played a significant role in their selection process, bypassing the popularity rankings.

For point-of-sale (POS) agents and other business personnel like traders and even ride-hailing drivers, many of these individuals consistently lean towards fintech apps as their preferred tools for their daily operations, regardless of the availability or popularity of banking apps.

E-Smart, a POS agent told Technext that “I don’t even trust POS that have bank logos on them. I prefer to stick with the other ones because everything goes smoothly in no time because this is business. Although I have my bank app for personal use, I have their time when things go south”.

Nicholas, a ride-hailing driver also said “I use only fintech apps for my business because I don’t have that time to wait for confirmation, alert, transaction successful. It delays my productivity. With (a fintech app mentioned), I get the credit alert even before you are debited”

A grocer (foodstuff seller) also commented when asked by a Technext staff saying, “Na my pikin say make I dey use this one (a fintech app). I never get any bank app for my life na that time wey naira scarce, he open this one for me and e dey very easy to use but I still dey learn”

Read Also: Are Nigerian Banks Now Conceding to Fintechs?

Bank apps vs Fintech apps

Accessibility and adaptability

When analyzing the comparison between some of the top fintech apps and the leading banking apps on the Store’s list, as well as taking into account customers’ preferences, one aspect that stood out prominently was the users; interactivity.

For some of these users, most traditional banking apps feature complex navigation, outdated user experience (UX), and a lengthy sign-up process, which made using the app difficult. In contrast, fintech apps were designed with mobile users in mind, offering a seamless onboarding experience through a simplistic user interface.

Shola, a cosmetic dealer in a local market on Lagos mainland. explained that these fintech apps have icons and labels that make it easier for him to navigate through. He further explained that, unlike the banking apps he has, these fintech apps have allowed him to carry out online banking operations even in his local town which is a low-connectivity area.

Read also: Palmpay vs Opay: What you need to know before you choose

Service offerings

Fintech apps revolutionized the way people managed their finances by introducing innovative features and incentives. With the ability to handle various financial tasks using a mobile device, customers were empowered with convenience and accessibility like never before. Unlike traditional banks, fintech apps went beyond basic functionalities, capturing customers’ attention with enticing discounts and promotions that enhanced their financial experience.

These fintech apps reward their users for their transactions, offering interest in their activities. Whether it was making payments, transferring funds, or investing, customers could earn additional benefits and maximize the value of their transactions. This added layer of financial incentives became a significant attraction for users, creating a sense of excitement and satisfaction when utilizing fintech apps.

As a result, the appeal of fintech apps continued to grow, with customers gravitating towards their enhanced offerings and seamless digital experiences. Traditional banks, on the other hand, faced the challenge of catching up and adapting to the rapidly evolving landscape of online banking, striving to match the unique advantages that fintech apps effortlessly provided. Also just like traditional banking apps, some of these fintech offer loan options but according to Sadiq, a friend of a POS agent, he said,

I fit borrow money from (a fintech app) without problem but I not fit trust all this (traditional banking app) before they use police come carry me.

Regulation and risk factor

When it comes to regulations and risk factors, it becomes challenging for new players to compete with these established banks, granting the incumbent banks significant market power. Banks are subject to regulation by national or central banks in their respective countries of origin.

These regulatory bodies impose legal requirements, restrictions, and guidelines to safeguard people’s money. Stricter regulations reduce risk, providing traditional banks with a safer alternative.

Speaking to a senior citizen, she said,

All these (fintech apps) look like a fraud. I cannot trust my banking details with all of these online platforms. My kids use it but I prefer going to the bank and seeing people who physically work there.

A businessman also told Technext that he preferred fintech apps for business but traditional banking apps as personal saving methods.

I cannot save my money somewhere I cannot go and meet them when I have issues. Calling all these customer care people will not be as effective as going to the bank.

On the other hand, fintech companies operate without strict regulations, allowing them to make changes to their business and operate with more freedom. While this enables fintech start-ups to work swiftly and adapt to user needs, it also introduces a certain level of risk, making the industry inherently riskier.