Digital Banking
Digital banks are financial institutions that offers banking services virtually via the internet platforms, mobile apps and USSD.
Digital banks primarily operate online. They may have headquarters, but do not operate branches. Most of them are licensed as microfinance banks and such are prohibited from having branches beyond the state where they are headquartered.
Banking Licencing in Nigeria
Central Bank of Nigeria has the authority to license and regulate the operations of banks and other financial institutions in Nigeria.
Banking licenses are classified into three major categories in Nigeria as provided by BOFIA 2010:
- commercial banks,
- merchant banks and
- specialised banks, this includes non-interest banks, mortgage banks, microfinance banks development banks,
With the advent of Fintech, the licensing categories, operation requirements, and regulatory guidelines were expanded and keep expanding to accommodate startup companies that are leveraging technological innovations to provide financial services.
There are currently 894 microfinance banks licensed by CBN in Nigeria. Some of these microfinance banks are fully digital banks while some adopted financial technological innovations to deliver their services in addition to their conventional means of operations.
While all institutions offering financial technological solutions are called Fintech companies, they are still licensed in different categories by CBN according to their offerings, such as Payment Service Banks, Mobile Money Operators, Payments Switching and Processing Companies, mobile microfinance banks, etc.
Digital Microfinance Banks in Nigeria
Carbon
Eyowo
FairMoney Microfinance Bank
Finex Microfinance Bank
Kuda Bank
Links Microfinance Bank
Renmoney Microfinance Bank
Moniepoint Microfinance Bank
PigyVest
Sparkle
VFD Microfinance Bank
FairMoney
FairMoney is a mobile microfinance bank providing loans. Licensed by CBN, FairMoney offers instant collateral-free loans of up to one million naira. It also offers savings bank account and issues debit card. According to information on the platform, FairMoney processes over 10,000 loans every day, with at least one loan disbursed every eight seconds.
Links Microfinance Bank
Links Microfinance Bank is licensed by CBN. Through its digital banking platform, Sofri, Link Microfinance Bank offers best poke banking services, offering savings, affordable loans, and highly rewarding investments.
Launched in 2022, Sofri aims to become a national microfinance bank in the near future.
Finex Microfinance Bank Ltd
Finex Microfinance Bank Ltd has virtual banked known as Mint, licensed by CBN Mint offers a range of services, including current and savings accounts, low-interest loans, and a personal finance tracker.
There are no account maintenance or transactions charges on both savings and current account.
Mint offers customers up to 36.5% interest on savings accounts.
Kuda Bank
Kuda is an online banking platform licensed by CBN to operate as a microfinance bank in Nigeria. It offers savings services, among other offerings.
Kuda Bank app offers flexible savings plans that allow users to choose how the make their savings — daily, weekly and monthly. This helps users save on regular basis. It also offers fixed deposit plan, which attracts up to 15% interest per annum.
Kuda Bank app is the most used online banking app in Nigeria with over 5 million downloads on Google Play Store.
Kuda is currently valued at $500 million
Interest Rate: Kuda Bank offers 10% interest per annum on flexible savings plan, while its fixed savings yields up to 15% interest annum.
PigyVest
PiggyVest (formerly PiggyBank) is digital microfinance bank licensed by CBN that allows account holders to save and invest with convenience in a secured manner.
PiggyVest enables you save little amount of money periodically: daily, weekly, monthly. You don’t have to log in every time to save because everything is done automatically once you set up Autosave with the amount you want to save periodically. You also have the option of turning off Autosave.
When you open PigyVest account, you will have 5 wallets — PiggyBank, Target savings, SafeLock, Flex Naira, Flex Dollar and Investify wallets.
PigyVest offers users between 6 - 12.5% interest on savings, 6% interest return on dollar savings, and between 5 to 15% returns on investments.
Sparkle
Launched in April, 2021, Sparkle is a mobile-based digital bank that provides a combination of financial, lifestyle, and business support services to Nigerians.
Sparkle has been licensed by Central Bank of Nigeria to operate as a microfinance bank, fintech, and is in partnership with Pricewaterhoue Coopers (PwC), Network International, Visa to enable its services.
While individuals can use features such as savings, bill payments, money transfers, and other basic services, Sparkle Business offers MSMEs and SMEs functions that include inventory and invoice management, a payment gateway service, tax advisory, and employee management.
Sparkle stands out the Neobanks in Nigeria in the sense that it is one of the few that offers a mix of individual and business banking services via a single platform.
VFD Microfinance Bank
VFD Microfinance bank is approved by CBN to operate digital and mobile banking. The mobile bank offers wide range of swift, secure, and cutting-edge banking services to both individuals and businesses. The bank helps its customers solve the financial problems and create wealth, through low-interest rates lending and high returns on savings.