Why Nigeria's biggest fintechs are racing to become banks

This is Follow the Money, our weekly series that unpacks the earnings, business, and scaling strategies of African fintechs, financial institutions, companies, and governments. A new edition drops every Monday.

Fintechs built their reputation by making payments faster and replacing many physical banking functions with smartphones. Now, they are becoming banks, or at least a particular kind of bank.

This year, Nigeria’s biggest fintechs have accelerated their push into banking through microfinance bank (MFB) licences as they seek to expand beyond their core businesses into full-service financial institutions.

In January, Paystack, the payments technology company now owned by The Stack Group (TSG), acquired Ladder Microfinance Bank. In April, Flutterwave, Africa’s largest payments startup, secured a national MFB licence through its acquisition of open banking startup Mono.

In May, Sycamore, a financial service group with lending and asset management businesses, told TechCabal it plans to build a deposit base of more than ₦40 billion ($29.13 million) as it expands from digital lending into banking and payments after acquiring an MFB.