What Nigerian Healthtech Startups can Learn from Fintech's Success

Shock and amazement greeted the announcement that Kuda bank, a Nigerian fintech startup, had raised a $55 million Series B a mere 4 months following its similarly blockbuster $25 million series A. Beyond the fundraise, Kuda also revealed that they had doubled their user base to over a million in only a few months. In response, cries of ‘God when’ rang through the tech ecosystem as many founders, not least health tech founders, dreamed about making similar progress in traction and fundraising. Such rapid growth in fundraising and user adoption is a feature of high-growth tech startups. Recently flutterwave, another Nigerian startup, reached unicorn (valued over $1 billion) status and Chipper cash, a Pan African startup, founded less than 4 years ago raised over $100 million. Both of these startups like Kuda are all fintechs. As a group, Nigerian fintechs have been remarkably successful at attracting venture capital and have collectively raised over $0.5 billion in the last 5 years.

When you dig deeper into the technology that powers these well-funded fintechs, you will find that they are all built on already existing financial technology infrastructure. In Nigeria, this infrastructure is largely based on work done by early pioneers such as Interswitch and NIBBS. The former was founded in 2002 and In 2008, became the first transaction-switching network to have every Nigerian bank connected to it and the only Nigerian e-payment company to have real-time online connections to all the banks in Nigeria. NIBBS on the other hand was formed in 1993. It is owned by all licensed banks and the financial regulator, CBN. It has successfully put in place “modern world-class infrastructures for handling inter-bank payments in order to remove potential bottlenecks associated with inter-bank funds transfer and settlement.” The infrastructure is so good that many Nigerians have become used to instant settlements in Nigeria and are baffled when they move to Europe or the U.S and find payments take 1–3 working days to settle. These pioneers were part of a fintech 1.0 revolution that also included a notable adoption of technology by banks “traceable to the post-1986 Structural Adjustment Programme introduction” [1]

The maturing of this infrastructure and technology adoption by financial service providers enabled the emergence of more recent startups like Kuda and flutterwave. These latter companies differ from their predecessors and arguably only exist because of the work done and rails built by the fintech 1.0 (infrastructure) pioneers. The main difference being that the newer companies were able to move beyond building expensive infrastructure to innovate further. This led to the rise of fintechs that are more focused on optimizing the consumer experience above all else, so-called fintech 2.0. In practice, this has meant sleeker more intuitive user interfaces, richer customer experiences, and more exotic features and value propositions. Essentially, consumerizing the fintech infrastructure. More importantly, it also meant that they could engender rapid customer growth once they had the rocket fuel that is VC money. 

Founders in the health tech space have seen this progress in fintech and are paying attention. More health tech startups are launching with inspiration from the fintechs. They launch with shiny interfaces and a promise of excellent customer experiences with many exotic benefits. Many health tech founders now seek to consumerize the healthcare experience with their startups. The challenge, however, is that health tech in Nigeria is yet to have its equivalent of the fintech 1.0 revolution. Health care providers are yet to adopt technology in a meaningful way and there isn’t much formal electronic communication or health data exchange between providers, patients, payors and the regulator. 

For this consumerization to take hold, healthtech first needs to move from 0.0 to 1.0. This would mean the widespread adoption of electronic means of health data collection with the ability to transmit said data digitally to different locations via an information exchange. The regulators would also need to be involved in interacting digitally and pushing the adoption of electronic standards. Healthcare has always been a laggard in tech adoption so will require significant incentives to overcome its inherent inertia. Thankfully, there are early indications that this 1.0 revolution is at hand with companies such as Helium health, mpharma and my own company Wellahealth who are working to digitize many aspects of the healthcare value chain starting with providers. This is difficult and expensive work and nowhere as straightforward as it is in finance. Healthcare is far more complex with thousands of businesses and providers involved at different levels and capabilities. The complex and multifaceted data points that are required to run healthcare smoothly compound the difficulty. 

My advice to almost every founder working in health tech in Nigeria is to recognize that we’re still in the early days of health tech in Nigeria, health tech 0.0. As a result, the vast majority of us should be more like fintech 1.0 and be more infrastructure-focused. So forget the beautiful pixels and the consumerization for now, choose instead to do the hard work of building the infrastructure to get us quicker to the summit of healthtech 1.0.

Notes

1. I borrow the terms fintech 1.0 and 2.0 from a Future Africa blog post on the history of Nigerian Fintech. Lessons From Nigeria’s Fintech History: Part 1 — Future Africa. The post goes on to describe fintech 3.0 as Telco-led and that healthcare would be a prime service that would benefit from it. A highly recommended read.