How AI is democratizing Nigeria’s fintech and why small players can now win – Olabanke Nwaoze

By Tosin Clegg

For years, the narrative in Nigeria’s fintech sector was simple; deep pockets win. The big players had the resources to absorb regulatory costs and spend heavily on marketing. As a smaller operator, you felt like David fighting Goliath with a rubber band.

But something has changed. Artificial intelligence is levelling the field. Today, a nimble fintech with a lean team can compete with the giants – not by outspending them, but by outsmarting them.

Olabanke Nwaoze, Founder of Wongafix Consumer and Business Consult Ltd has defied these odds as she started as a small lending operation from a converted room in her apartment. For Nwaoze she recounts that, “We had no millions for advertising, no army of data scientists. What we had was a clear understanding of the market gap: millions of lowincome workers with stable incomes but no credit history.”

Traditional lenders wouldn’t touch them. But AI gave them the tools to solve that problem without a massive budget. And that helped many people get access to what might have seemed impossible at some points.

Credit scoring without credit history played a huge problem for many but yet she found a way around it with AI. The old way of underwriting relied on collateral, formal credit bureau reports, and years of financial history – all of which excluded the very people they wanted to serve. AIpowered alternative credit scoring changed that. By analyzing mobile money transactions, utility payments, and even behavioral patterns, they could build a reliable risk profile for someone who had never taken a bank loan.

Today, even the smallest fintech can plug into AIdriven decisioning engines that cost a fraction of what traditional underwriting systems used to cost. Lendsqr is now developing AI models that analyse voice and facial cues to predict creditworthiness – achieving over 70% accuracy. That’s available to any startup with an API key.

One of the biggest barriers for small fintechs has always been regulatory compliance. Meeting CBN requirements, antimoney laundering checks, and KYC rules used to require a dedicated legal and compliance team. And that was expensive but today AI has automated much of that. Now, chatbots handle KYC verification, machine learning models flag suspicious transactions in realtime, and automated reporting tools generate compliance filings with minimal human intervention. According to the 2024 CBN Fintech Survey, over 80% of Nigerian fintechs now use AI for fraud detection – and the smallest players are adopting these tools fastest because they can’t afford not to.

For a lender, nothing matters more than managing default risk. In the past, risk reviews were monthly or quarterly exercises. By the time you spotted a problem, it was often too late. AI gives the company realtime portfolio monitoring. Algorithms track repayment behaviour, flag anomalies, and even predict which customers might default before they miss a payment. This allows a small team to manage a large loan book without hiring an army of credit officers.

According to Nwaoze from her own journey navigating Nigeria’s fintechspace, “It’s clear that AI isn’t just a fancy tool for the big players anymore it’s a genuine lifeline for those of us starting small. If used smartly, it can be the key to not just competing, but building something truly special.”
“Think of AI as the “superpower” that helps you close the gap with established giants. For a smaller fintech like the one I’m building, it’s not about outspending them; it’s about outsmarting them.”
With this direction deploying AI she has been able to build a system that works with less but achieves more. And has she had made it possible it’s also evident many can leverage on this to build their own companies and achieve massive results.
For every bit of power AI gives us, it also brings new responsibilities. Ignoring these risks is like building a fast car with no brakes. Giving guidance on managing these times, Nwaoze shares that, “Building Trust in a Skeptical Market. This is perhaps the biggest challenge. Our customers are often wary of technology they don’t understand. Research shows that many users fear AI will mishandle their complaints or that they’ll lose the personal touch they need when a problem arises. The solution? A “blended” approach. Use AI to handle the routine stuff but make it easy for customers to reach a real human for complex or sensitive issues. You have to build trust one conversation at a time.”
“Data Privacy and Security Are Non-Negotiable. As a fintech, you are handling sensitive financial information. Any breach or misuse of data will instantly shatter the trust you’ve worked so hard to build. You must be ruthless about protecting your customers’ privacy, clearly explaining how you use their data, and building a secure infrastructure from day one. Avoiding Algorithmic Bias. AI learns from data, and if that data contains historical bias (like against certain neighbourhoods or professions), your AI will learn and amplify it. This can lead to unfair lending practices that are both unethical and illegal. You must constantly audit your models to ensure they are making fair, unbiased decisions.”
Ultimately, AI is a powerful engine, but it’s your integrity and vision that steer the ship. In our world, trust isn’t just a nice-to-have—it’s the currency that matters most. By wielding AI with empathy and foresight, many can build fintechs that don’t just grow, but truly empower the people they serve. Looking ahead to 2030, she sees three major shifts,“Regulatory AI, voicefirst lending, and open banking meeting AI. The CBN has already signalled a “digitalfirst” regulatory culture, which will actually benefit compliant small players by weeding out unlicensed lenders. Voicebased AI will open up the last mile of financial inclusion for lowliteracy users. And once open banking frameworks mature, AI will be able to analyse a customer’s entire financial life across multiple accounts without requiring them to submit a single document.”

AI is not magic. It doesn’t replace the need for ethical lending, good customer service, or a sustainable business model. But it has removed the excuse that “only big companies can do this.” Today, a determined founder with a laptop and an AIpowered credit engine can build a fintech that competes with the best of them.