Interest rates easing in developed economies will benefit startups – Verto CEO

Co-founder and CEO of Verto, Ola Oyetayo, with a background in finance, consulting, and entrepreneurship, discusses the potential role of fintech in the ongoing bank recapitalisation with FELIX OLOYEDE

How will you assess Nigeria’s fintech ecosystem?

Nigeria’s fintech ecosystem is evolving rapidly, largely due to increasing mobile penetration and demand for digital financial services. Over the past decade, there has been a wave of innovative venture-backed fintech companies and this has really accelerated the adoption of their solutions by consumers, Given the highly entrepreneurial culture in Nigeria, I expect this trend to continue

What role do you think fintechs can play in the ongoing bank recapitalisation?

Fintechs can support the ongoing bank recapitalization by offering advanced technological solutions to enhance efficiency and expand access to capital at banks. Digital platforms and automation can streamline operations such as onboarding and transaction processing. Fintechs can also partner strategically with banks to develop innovative financial products and, thus, create new revenue streams and maintain their competitive advantage. Once capital has been raised and deployed, we will then likely see economic growth and lower interest rates, which should free up liquidity and further help the Nigerian economy.

What motivated you to go into the fintech space?

The idea for Verto was sparked back in 2017 when I saw a major opportunity to solve cross-border payment problems, especially for transactions involving emerging markets like Nigeria. I grew up and schooled in Nigeria and then moved to the UK, which is where I witnessed the challenges businesses that operate in emerging markets face, especially those that deal with Africa, given the structural challenges with liquidity and settlements in these markets. At the time, I was working a corporate job but was very familiar with the difficulties of making international payments to suppliers or sending money to family abroad. The process was ridden with inefficiencies, a lack of transparency, and high costs.

During a casual poker game with my eventual co-founder, Anthony, I vented my frustrations about these payment issues. Anthony was just starting his MBA and launching a prop-tech startup, and as a founder, he related to the problems I had described.

We both realised there was a huge unmet need for a solution that could enable faster, cheaper, and more transparent cross-border payments utilising digital technology. We decided to take the entrepreneurial leap and quit our jobs to build a disruptive fintech company.

So Verto was born out of our first-hand experiences dealing with the problems of international money transfers and payments. Our mission from day one has been to empower individuals, businesses, and organisations by making cross-border financial transactions seamless, secure, and cost-effective, especially in emerging markets that have been overlooked by traditional players.

What distinguishes Verto is its acute focus on emerging markets—a sector of the payments and fintech industry that is both vastly underserved and exceedingly fragmented. We offer five times cheaper FX rates than most banks, with a 53 per cent decrease in payment operations costs. In terms of speed and reliability, we can boast of a 95 per cent transaction success rate, with 99.8 per cent of these transactions processed in 24 hours. By tailoring our services to meet the unique demands of regions where traditional financial institutions may fall short, we have positioned our company as a transformative force in facilitating efficient and accessible global transactions.

Though headquartered in the UK, we proudly operate across four global offices, with team members located in Kenya, India, South Africa and Nigeria. Currently, our foreign exchange solutions are available in 49+ currencies, including exotic currencies like the Nigerian Naira, Kenyan Shillings, and the South African Rand, with payouts to over 170 countries.

How will you assess international payments in Nigeria?

The international payments landscape in Nigeria is characterised by a dynamic and rapidly evolving environment driven by increasing globalisation, technological advancements, and regulatory reforms. Traditional banks continue to play a key role, but we are seeing fintechs like ourselves gain traction in the international payments space by providing greater efficiency and lower costs for cross-border transactions.

Despite challenges, such as foreign exchange regulations, limited infrastructure, and cybersecurity concerns, the sector is growing, supported by rising demand for seamless, fast, and affordable international payment solutions.

Additionally, the CBN’s efforts to streamline foreign exchange policies and promote financial inclusion are contributing to a more robust international payment ecosystem.

Overall, the landscape is marked by significant opportunities for growth and innovation, positioning Nigeria as an emerging hub for international financial transactions in Africa. The upside is significant; the global B2B payments market is valued at $125tn, with Sub-Saharan Africa’s share estimated to be approximately $1.5tn, according to the World Bank.

The central bank has made some reforms regarding international money transfers. How has Verto been able to key into these?

Verto is a licensed international money transfer operator and, as such, has been able to help support the recent reforms by the CBN by ensuring remittances into the country flow through the formal channels, which has in turn helped provide much-needed liquidity into our foreign exchange markets.

Transborder payments are still a major challenge in Africa. How will this impact AfTCTA?

Cross-border challenges, such as high transaction costs and slow processing, can impact the implementation of AfTCTA by hindering trade across Africa, which in turn can limit the economic growth and integration that AfCFTA is aiming to achieve. This means that efficient cross-border payments are essential for facilitating trade within Africa and thus delivering on AfTCTA’s goals. It is worth highlighting that the AU and Afrexim Bank are looking to resolve this issue via the Pan African Payments Settlements Scheme, which is laudable.

How can the transborder payment challenge be tackled on the continent?

Africa is a continent teeming with potential, and it’s a rapidly growing hub for businesses of all sizes. However, the complexities and challenges of cross-border payments have long been a hurdle for businesses looking to operate in Africa.

Verto was born out of a vision to change that. We want to be the bridge that makes doing business in Africa seamless. With our platform, businesses from around the world can effortlessly conduct transactions with African entities, eliminating the friction that previously hindered such interactions.

Our adoption of cutting-edge financial technology allows us to overcome obstacles, streamline international payouts, and ease currency conversion, making frictionless cross-border payments a reality. For instance, our cross-border payment service is specifically designed to simplify the intricacies of payments. It enables companies to complete transactions swiftly, with full transparency and efficiency, thereby propelling their global expansion.

Funding for startups is thinning out in Africa. What is Verto doing differently to be able to attract the needed funding?

Verto’s expertise and offerings in our core market of Africa differentiate us from larger global players. We also offer a range of payment services on a user-friendly platform. We are backed by world-class venture capitalists and will continue to enjoy their trust as we grow the business. The support and confidence from these investors, along with our success in achieving key milestones, have enabled us to grow our operations, expand our team, and achieve approximately $12bn in annual transactions across 190+ payout countries. We are grateful for their belief in our vision and will continue to actively seek funding opportunities to further fuel our growth.

How is Verto coping with the infrastructure deficit in the country?

We are essentially a global fintech company. So most of our infrastructure is hosted outside the country. We, however, believe that the recent reforms undertaken by the current administration should help reduce the current deficit.

What role can blockchain play in international payment?

Blockchain technology can revolutionise international payments in Africa by providing a more efficient, secure, and transparent alternative to traditional banking systems.

Blockchain’s decentralised nature eliminates the need for intermediaries, significantly reducing transaction costs and processing times, which is crucial for cross-border payments, where delays and high fees are common when using traditional banking partners.

For Africa specifically, with its high mobile penetration and growing digital economy, blockchain can streamline remittances, boost trade by simplifying cross-border transactions, and foster economic growth by creating a more reliable and inclusive financial infrastructure.

Dollar scarcity in the country made it difficult for many businesses to fund international transactions last year. What is the situation currently?

Dollar scarcity over the past year has had an impact on businesses’ ability to fund international transactions. This dollar scarcity has been due to declining oil revenues and a reduction in foreign capital in the country. The result of this is that certain businesses have struggled to access foreign currencies for imports, raw materials and other international payments. The CBN has taken steps to manage the demand for FX, but certain companies still struggle to access the required dollars. The recent unification of the exchange rates and increased liquidity available through NAFEM have been quite instrumental in improving the availability of dollars.

What is the future like for Verto in the next 10 years?

We are intent on being the primary publicly-listed non-bank financial institution facilitating cross-border payments for companies doing business in Africa. Our path to achieving this consists of continuing to expand our footprint into other key markets, as well as ensuring that our products and services continue to stay best in class so that we can continue our fantastic service for businesses across Africa.

Do you have plans to set up a brick-and-mortar bank in the future with your vast experience in the financial sector?

Verto’s ambition is to be the primary non-bank financial institution for businesses doing cross-border payments in Africa. Whether or not this will require a brick-and-mortar bank will depend on broader trends and the demands of our clients. Normally, brick-and-mortar banks are focused on individual consumers, whereas Verto focuses on B2B payments. However, as always, we will remain agile and develop our strategy on how best to serve our clients’ needs.

How is the easing of interest rates in developed economies going to affect startup funding in Nigeria and other emerging markets?

The easing of interest rates in developed economies can be potentially beneficial to startup funding in Nigeria and other emerging markets. Lower rates may lead to more global investment capital seeking higher returns. This could potentially flow into emerging markets like Nigeria, boosting startup funding. Nigeria, with its dynamic and fast-growing startup ecosystem, could become a prime target for these investors seeking better returns. It’s important to acknowledge that the Nigerian government and financial institutions can play a crucial role in capitalising on this trend. Implementing policies that make it easier for foreign investors to participate in the Nigerian startup ecosystem could be a game-changer.

How will diaspora Nigerians participate in the ongoing bank recapitalisation?

Nigeria’s large diaspora population will most likely participate in the bank recapitalisation exercises by investing in the equities of the banks that choose to capitalise by offering new common equity or that carry out rights issues. Given the favourable exchange rates, they have significantly large purchasing power and I expect that they will continue to actively participate in the Nigerian stock exchange.

How has the hawkish stance of the CBN affected foreign inflows?

The Central Bank of Nigeria’s hawkish stance, with its higher interest rates, presents a double-edged sword for foreign inflow. While it can attract foreign investors seeking higher returns on Nigerian bonds and potentially stabilising the exchange rate, it can also come at the cost of making borrowing more expensive for local businesses. The CBN’s challenge lies in calibrating its stance to attract long-term foreign capital that fosters sustainable economic development while managing domestic inflationary pressures.

How do you assess the way the CBN has been tackling inflation in the country?

It is complex to definitively assess the CBN’s strategy. While it aims to control inflation, the impact on economic growth and addressing underlying supply-chain issues need to be considered.