At a sparsely filled 1,000-capacity hall at the Federal University of Agriculture, Abeokuta (FUNAAB) last October, Seye Bandele, co-founder and CEO of PaidHR, speaking to a student audience convened by the Junior Chamber International Nigeria, FUNAAB chapter, revealed one of his firm’s end goals. The startup founder noted that for all of PaidHR’s current strides (the HRtech/fintech startup was fresh off raising a $1.8 million seed round at the time), one of its ultimate goals is to be a bank in the near future.

For many in the audience, Seye’s opening remarks likely didn’t strike a chord, as he went on to deliver an inspiring keynote address on building lasting legacies at the organisation’s seventh instalment of its Future Leaders Summit. Without a doubt, the potential development of PaidHR into the entity its CEO envisions will require far more in capital and infrastructure than what has fuelled it to its current status, but one thing it would not be short of is Nigerian models, thanks to the trail blazed by those before them.

Last week, Africa’s most valuable unicorn, Flutterwave, successfully secured a national microfinance banking licence to operate in the country. The unicorn has long possessed relevant licences for payment services and cross-border transfers across West Africa, but the MFB licence, which it acquired via its all-stock acquisition of open banking startup Mono earlier in the year, ensures it can now offer bank accounts, issue loans, and hold customer deposits without the dependency on commercial banks that was once its reality.

We’ve secured a Nigerian banking license! 🇳🇬🔥https://t.co/bKgtgbAdA3 pic.twitter.com/TC244BZyvo

— Flutterwave (@theflutterwave) April 2, 2026

While many of the headlines locally have tagged the milestone a “banking license” rather than the “microfinance banking license” it essentially is (a microfinance bank focuses on individuals and small businesses with limited services, while a commercial bank serves a broader market with a full range of offerings), the distinction matters, and for Flutterwave, so does what comes with it.

For the opening decade of its operations, Flutterwave has, by default, had to rely on third-party commercial banking infrastructure, serving mainly as the processor of transactions rather than a holder of funds. The weight of this limitation is laid bare in CEO Olugbenga “GB” Agboola’s words to TechCabal: “$40 billion has gone through our platform. That is not double-counting, and not one cent was retained,” the unicorn founder said. “With this new phase of life, money now stays on our platform. Margins get better. That’s the value of owning infrastructure.”

For all of their technological solutions, Flutterwave had to rely on existing commercial banking infrastructure. It was the only viable route, as traditional banks possessed what fintechs did not and could not easily build at the time: funds clearing and settlement infrastructure. Additionally, as an early-stage startup, the capital requirements for a banking licence were out of reach, so it had to operate by moving and processing money, while its partner banks held the funds, and invariably extract significantly higher revenue per customer.

The somewhat symbiotic relationship afforded fintechs the ability to build relatively faster and scale, but it came with clear ceilings, as GB pointed out. Now, as Flutterwave has grown to attain what it once relied on traditional banks for, fully banking its users, it can maximise revenue per customer and strengthen its position against competition from all fronts.

The Growing Fintech-to-MFB Pipeline

Similarly, Paystack has taken a familiar route earlier in the year with the launch of Paystack Microfinance Bank, the result of acquiring Ladder Microfinance Bank. With a track record that has seen it process over half of Nigeria’s online payments, and a broader African footprint that represents 46% of the continent’s GDP, the Stripe-owned Nigerian fintech stepped into the second decade of its operations by taking ownership of every part of the infrastructure it had depended on for the last decade.

“After 10 years of building payment infrastructure and going deep, we realised that businesses needed more than just getting paid to grow,” Amandine Lobelle, Paystack’s Chief Operating Officer, told TechCabal. “We wanted to leverage the expertise that we have built over the last decade to continue to address some of the pain points that businesses have.”

It is the same for Moniepoint, which has been operating as a microfinance bank and has served over 10 million people and businesses across the country since receiving its licence in February 2022.

These fintechs have done the gruelling work, and it is perhaps just getting started, but it has earned them enough capital for licences, the compliance infrastructure to operate at scale, substantial transaction data to guide decision-making, and the user trust that underpins financial services. The microfinance phase for these companies is a structural and competitive necessity that enables them to serve the market better as they move into a more definitive phase of their operations.

What the Growth Portends

Intense competition, that much is certain. Nigerian fintechs are already the fastest-growing technology sector in the country, if not on the continent. In one of its less busy investment years, the sector accounted for 40% of total funding raised on the continent in 2025, per TechCabal Insights. Competition within this well-oiled sector has long been internal. Now, their move into microfinance banking widens the competitive pool further, as they begin to go head-to-head with traditional banks for long-held market share.

The leverage traditional banks once enjoyed is fast eroding. The biggest fintechs no longer need them, and the growing ones are not oblivious to this shift and are increasingly inclined to reconsider their stance. In the long run, the competition is in itself a net positive for consumers.