FairMoney’s profit has surged from N400 million last year to N2 billion in the first nine months of 2021 as the financial technology giant continues to maintain an excellent risk management strategy while providing digital banking services to customers in Nigeria and emerging markets.
“How have we achieved this profitability? It is the way we serve our customers. If you look at lending, you give anyone a loan but you should be able to tell who is likely to pay back and who is not likely to pay back,” said Yaw Mante · Head of Finance at FairMoney , during a recent investor conference in Lagos.
“We use the learnings we have had from doing this for three years and continue to scale and keep risks cut down; generate more profitability which is good because the more profitable we are, the more customers we can serve,” Mante added.
FairMoney was founded in 2017 as neobank to serve the significantly underserved by Nigerian banks as it leverages a credit-first model that offers loans to solve access to credit problems.
Of course, the demographic shift means a lot of young people especially those within the ages of 18-35 years will have a predilection for applications that allows them to carry out transactions while laying on their couches.
“Nigeria is a fantastic market for Fintech with a very large population, every year there are four million new adults joining the adult population, every other country would like to have these statistics,” said Laurin Hainy, CEO and Co-owner of the company.
FairMoney uses the power of technology to underwrite loan facilities, adding that they have come up with very sophisticated artificial intelligence methods to underwrite loan facilities.
The fintech firm’s Non performing Loans are lower than the average standard while growth rates are higher than the average standard, according to Hainy.
The company has been given license by the central bank to operate as a microfinance bank extending cheaper credit to small business owners
Financial technology firms are the next growth face of a digital economy as they are going to cannibalise conventional banks’ revenue who give loans at steep interest rates to customers.
Between 2014 and 2019, Nigeria’s bustling fintech scene raised more than $600 million in funding, attracting 25 percent ($122 million) of the $491.6 million raised by African tech startups in 2019 alone—second only to Kenya, which attracted $149 million.
FairMoney projects a $300 million loan disbursement in 2021; $270 million in Nigeria and $30 million in India.
It raised $42 million in a funding round led by Tiger Global Management, a New York hedge fund. It will use the funds to build the financial home for its users, hire top engineers across the globe and go deeper into core markets.
“The idea is to build the first and biggest online bank in Nigeria that would still be existing in the next 100 years,” said Hainy.