Nigerian banks’ fintech subsidiaries—GTCO’s HabariPay, Access Bank’s Hydrogen Payment Service, and Zest Payment Services Limited—demonstrated varied performances in the first quarter of 2024 as digital payment adoption surged across the country.
Strong Performances
BusinessDay’s analysis revealed that these fintech entities experienced notable increases in profits driven by the growing usage of their payment gateways, switching verticals, and bill payment services.
HabariPay (GTCO):
HabariPay reported a profit after tax of N1.09 billion, reflecting a 72.4% increase from N632 million in Q1 2023. The fintech’s operating income rose to N1.4 billion from N1.03 billion, while operating expenses decreased to N307 million from N386 million.
Hydrogen Payment (Access Bank):
Hydrogen achieved an after-tax profit of N50 million, a significant turnaround from a negative N612 million in the same period last year. The operating income surged to N594 million from N41 million, with operating expenses dropping to N543 million from N653 million.
Challenging Outcomes
Zest Payment (formerly Stanbic IBTC Financial Service Limited):
Zest Payment recorded an after-tax loss of N436 million, up from a loss of N150 million in Q1 2023. Despite a rise in total income to N33 million from N4 million, operating expenses escalated to N469 million from N154 million.
Strategic Investments and Future Plans
Stanbic IBTC Holdings launched its fintech venture, Zest Payment, in May 2023, joining peers like GTCO’s HabariPay and Access Bank’s Hydrogen Pay. These fintech initiatives, while still in their early stages, demonstrate ambitious growth plans.
Segun Agbaje, GTCO’s Group CEO, expressed confidence in pushing HabariPay to unicorn status soon. HabariPay conducts its payment operations through Squad, a platform that achieved N200 billion in monthly transactions by January 2023 and became profitable in its first month.
Access Bank’s Hydrogen Payment offers diverse services, including lending, payment card issuance, fraud detection, recurring payments, and storefront management. These comprehensive services position Hydrogen as a versatile player in the fintech space.
Market Perception and Retail Strategies
Experts attribute the success of bank-backed fintechs to their retail banking strategies and consumer engagement initiatives. GTCO’s investment in food and clothing bazaars has been particularly effective, drawing small businesses and consumers, thereby boosting brand exposure and consumer spending.
Ifeanyi Caleb, a financial analyst, highlighted the perception advantage of bank-backed fintechs. “Investors and the public often see these fintechs as more stable and less risky compared to standalone startups, giving them a valuation edge.”
Future Prospects
The landscape for bank-backed fintechs in Nigeria is promising, with investors shifting focus towards revenue and profitability. The fintech subsidiaries’ ability to leverage their parent banks’ resources and customer base positions them well for continued growth and innovation in the digital payment sector. This trend is expected to foster more competitive and robust financial services, further integrating digital payments into Nigeria’s economy.
