AI to unlock $434m Nigerian Fintech market in Africa 

Joy Agwunobi 

The rapid expansion of Nigeria’s fintech sector is playing a pivotal role in shaping Africa’s digital financial ecosystem, with industry players emphasising the need for strategic adoption of Artificial Intelligence (AI) to sustain competitiveness.

Remita, a leading payment solutions provider in Nigeria, highlights AI as a game-changer for fintech firms, enabling them to enhance efficiency, security, and customer experience in an industry projected to reach $434.4 million by 2026.

With an impressive annual growth rate of 44.2 percent, the sector is evolving rapidly, making AI adoption a crucial factor for firms aiming to secure a strong market position.

This insight is drawn from Remita’s latest report, “Unlocking the Power of AI in Nigeria’s Fintech Sector,” which identifies AI as a critical catalyst for industry transformation. The report highlights key factors driving Nigeria’s fintech leadership, including rapid technological adoption, access to local and international funding, an expanding talent pool, increased participation by banks and telecom firms, the availability of international offerings, and supportive government policies.

The report urges fintechs to harness AI’s potential in streamlining operations, enhancing decision-making, and improving fraud management. Currently, Nigeria accounts for over 29 percent of all venture funding in Africa, with fintech startups receiving 52 percent of these investments. Of Africa’s nine unicorns, eight are fintech firms—five of which are Nigerian,highlighting the sector’s dominance and the critical role AI can play in sustaining its growth.

AI-driven tools are already proving transformative by automating customer support, accelerating product development, improving access to information, enhancing documentation processes, and facilitating entry into new markets. “Adoption is essential to position firms for this growth,” the report emphasises, adding that  AI is a non-negotiable step toward resilience and innovation.

Nigeria’s digital transactions surged to 11.2 billion in 2024, a 16.7 percent  increase from 2023, reaching a valuation of $713 billion (N1.07 quadrillion). The report argues that AI could further amplify this growth, especially as financial inclusion has doubled from 32 percent in 2012 to 64 percent in 2024, driven primarily by fintech solutions. However, Remita warns that firms failing to integrate AI risk falling behind in the next wave of innovation.

However, while artificial intelligence (AI) continues to revolutionise the financial technology sector, it is not without risks. The rapid advancement of AI-driven systems has introduced new threats, including deepfake-enabled social engineering, identity fraud, large-scale Distributed Denial of Service (DDoS) attacks, and systemic cyber threats targeting both companies and nations.

Remita further outlined six major risk areas that fintech companies must address to ensure the safe and ethical deployment of AI in their operations. These risk areas include:

Data privacy and compliance remains a critical concern for fintechs adopting AI solutions. AI systems rely heavily on vast amounts of data to function effectively, but improper data handling can lead to breaches and regulatory violations.

The study recommends that fintechs establish AI governance policies to regulate data access and usage, ensuring that stakeholders handle information responsibly.

Cyber fraud has long been a challenge for fintechs, and AI presents both risks and solutions in this domain. Fraudsters are increasingly leveraging AI to develop sophisticated attack methods, making it crucial for fintechs to enhance their fraud detection and prevention mechanisms.

However, AI-powered fraud detection systems can significantly strengthen security by identifying anomalies in real time. The report highlights that fintech firms have various options to counter cyber fraud, including advanced AI-driven fraud engines—open-source, proprietary, or hybrid models.

Another major risk in AI adoption is bias, which can lead to unfair decision-making in financial services. The report advises fintech companies to regularly audit their AI models to detect and rectify biases, hallucinations, and other inconsistencies. Without proper oversight, biased AI systems can create discriminatory lending practices, inaccurate credit scoring, and unfair access to financial services.

To mitigate this, fintechs should implement fairness and accuracy audits, ensuring AI-generated outcomes are transparent, unbiased, and aligned with ethical standards.

The increasing reliance on global AI models and cloud infrastructure poses a challenge to data sovereignty. Many fintechs operate using AI tools hosted on international servers, which may conflict with local data residency laws. The report stresses that Nigerian fintech companies must ensure their AI solutions comply with domestic regulations, particularly the Nigeria Data Protection Act (NDPA) and the Nigeria Data Protection Commission (NDPC) guidelines.

To address this, fintechs should prioritise local data storage and develop AI solutions that protect customer data access. By localising their data infrastructure, fintech firms can align with national cybersecurity frameworks while reducing exposure to international data privacy conflicts.

AI misuse presents another significant risk, encompassing unauthorised access, manipulation of financial data, and unethical deployment of AI systems. The report recommends embedding safeguards within AI deployments to detect and prevent unethical practices, ensuring alignment with business objectives and regulatory frameworks.

The growing reliance on AI-powered assistants and automated financial advisors heightens the risk of misinformation. The report highlights that while AI models generate sophisticated insights, they do not inherently verify the accuracy of the information they produce. This can lead to misleading outputs, financial misjudgments, and regulatory challenges. Fintech firms must, therefore, incorporate measures to validate AI-generated content, preserving customer trust and regulatory compliance.

AI holds immense potential for the fintech industry, but its deployment must be handled with caution. By proactively addressing these risks and implementing strong regulatory frameworks, fintech firms can harness AI’s capabilities while safeguarding their customers and operations.

Another  growing concern in AI-driven fintech solutions is the risk of misinformation. The increasing dependence on AI-powered financial advisors and automated decision-making tools introduces the potential for inaccurate or misleading outputs.

The report warns that AI models, while powerful, do not inherently verify the accuracy of the information they generate, leading to customer distrust, misinformed financial decisions, and regulatory non-compliance.

To address these challenges, Remita recommends that fintechs implement rigorous training mechanisms using verified financial data. Human oversight should be integrated into AI-driven systems to cross-check outputs for accuracy, while real-time fact-checking protocols should be embedded to validate AI-generated financial insights before they reach customers.

Beyond internal safeguards, the report highlights the importance of collaboration among key industry players—including AI developers, research institutions, and fintech stakeholders—to drive responsible AI adoption, noting that a collective approach would help fintech companies scale AI-driven solutions while ensuring compliance, security, and ethical deployment.

“The industry must work together to create frameworks for AI adoption across multiple fintech use cases in Nigeria. This collaboration is essential to making AI solutions accessible to technology builders and ensuring that fintech innovation is both responsible and sustainable,” the report stated.

Additionally, the report stresses that industry players have a critical role in talent development, ensuring that Nigeria builds a strong AI workforce capable of fueling continued innovation and economic growth.

Looking ahead, the report underscores that fintechs that boldly and responsibly adopt AI will be at the forefront of redefining financial services. By proactively addressing risks—ranging from data sovereignty and fraud prevention to ethical AI governance and misinformation control—these firms will contribute to the deepening of economic growth and help position Africa as a leader in AI-driven financial inclusion.

“Fintechs that take the lead in responsible AI adoption will play a crucial role in shaping a future where technology empowers individuals and businesses, enabling inclusive financial services and broader economic opportunities for all,” the report noted.

Speaking on the report, DeRemi Atanda, managing director of Remita, highlighted the evolution of Nigeria’s fintech sector, stating that while it has long been driven by bold ambition and relentless execution, the next phase of growth demands strategic intelligence. He emphasised that artificial intelligence (AI) is a crucial tool for unlocking new possibilities.

“The future of leadership will belong to those who can harness the full potential of emerging technologies like AI,” Atanda noted. “The question is no longer about whether to adopt AI but rather how to implement it effectively for maximum impact.”

Uchenna Okpagu, chief AI officer at Remita, described AI as a force multiplier rather than just a standalone feature. He stressed that fintech companies integrating AI into their core operations, enhancing security, scalability, and business intelligence—will be the key players shaping the financial sector over the next decade.