Rotimi Awofisibe is the Managing Director of VFD Microfinance Bank. In this interview with SEGUN KASALI, he delves into the challenges and opportunities within Nigeria’s fintech ecosystem, alongside his personal journey and the strategic vision for his bank.
WHAT was life like for you after university?
After completing my university studies, I began my career at Sterling Bank’s Oju Iwoye branch, where I focused on deposit mobilization. The experience was tough—sometimes, we had to go into markets to collect cash, including handling large sums, like the N400,000 on my first day amidst a bustling market. It wasn’t the kind of start I expected, especially when many of my peers were joining top companies like Mobil and Chevron.
A couple of weeks later, I transitioned to the Lagos State Internal Revenue Service (LIRS) as a Revenue Supervisor in Tax Audit, where I spent almost three years. Then, I made the move to the private sector with First Bank, where I started at the entry level. It was challenging to begin anew, but I worked my way up from Customer Service to Business Performance Monitoring, where I focused on performance management and strategy.
I later returned to Sterling Bank in a similar role before joining VFD Group in March 2018. In October of that year, I was seconded to serve as Technical Assistant to Dr. Rabiu Olowo, Lagos State Commissioner for Finance, a position I held for three years. Eventually, VFD offered me an Executive Director role, which brought my professional journey full circle.
Can you tell us about the origins of VFD Microfinance Bank?
VFD Microfinance Bank was incorporated in 2014 and stands as one of Nigeria’s pioneering digital banks. We initially operated with a lending-focused business model under a microfinance bank license, exclusively through digital channels, without physical branches. By 2017, we fully embraced digitalization, and our visibility surged in 2019/2020 during the COVID-19 pandemic, especially with Don Jazzy joining us as a brand ambassador.
As a subsidiary of VFD Group, we’ve intentionally focused on organic growth—expanding our balance sheet and shareholders’ equity without relying on external funding or venture capital. While many microfinance banks have opted for rapid expansion through VC funding, we’ve chosen a path of sustainable growth. Today, we serve over five million customer accounts, with approximately 700,000 unique customers. Our goal for the coming year is to secure a national banking license.
How is the bank performing financially?
We closed the previous year with a balance sheet of about N28 billion, which has since grown to approximately N37 billion. Deposit mobilization has shown significant growth, and we’ve made substantial progress in reducing Non-Performing Loans (NPLs). At the start of the year, our NPL rate stood at 18%. We successfully reduced it to 7.16%, and currently, it’s about 9.8%, with a target to bring it down to 5% soon.
What strategies are in place to achieve this reduction in NPLs?
The first step was to identify the root causes of our NPLs and tackle them head-on. I worked closely with my team to align our efforts. I believe in leading from the front and being actively involved in solving challenges alongside my team.
By July, after hitting a key profitability milestone, my team gained confidence in our approach, and they even proposed setting higher targets. This hands-on collaboration and shared commitment to our vision have been crucial in driving our success.
What is your perspective on the fintech ecosystem in Nigeria?
The fintech space is the future of Nigeria’s financial services industry—it’s already reshaping the sector. Commercial banks are investing heavily in technology to compete with fintechs, which now account for 50-60% of transaction volumes in the industry. This indicates their leadership and influence in the market.
Although commercial banks are catching up, fintechs are driving continuous innovation. However, challenges such as foreign exchange availability persist. Nonetheless, the healthy competition between fintechs and traditional banks is a powerful motivator for the sector’s evolution.
Is there a rivalry between banks and fintechs?
I wouldn’t describe it as rivalry—rather, it’s a healthy competition. As the financial landscape evolves, commercial banks are now acquiring microfinance licenses to tap into the fintech space. This mirrors the transformation seen when Nigeria’s top banks displaced others to become market leaders. Change is inevitable, and the sector will continue to adapt.
How can the government support the emerging fintech industry?
Many fintechs operate under microfinance bank licenses, which come with certain limitations, such as the requirement that 80% of loans go to individual customers or microlenders (those seeking loans below N5 million). This restricts fintechs from scaling up their transactions to the levels seen with commercial banks.
Additionally, there is uncertainty regarding recapitalization policies. Clear guidelines and timelines would help us prepare. Allowing microfinance banks to participate in foreign exchange transactions, even with certain caps, would also help address unmet customer needs. For example, customers often transfer funds to other platforms to pay for international services like Google subscriptions.
What is VFD’s stance on data privacy and security?
We fully adhere to the Central Bank of Nigeria’s (CBN) regulations on data privacy and KYC requirements. Following the CBN’s mandate that customer data should remain within Nigeria, we’ve begun exploring on-premise technology solutions to stay compliant.
To safeguard our customers’ data, we conduct vulnerability testing up to four times a year to ensure our systems are secure. We’ve also formed partnerships with trusted local and international platforms to bolster our data protection efforts.
What is the relationship between fintechs and Nigeria’s youth?
Nigeria’s youth have embraced fintech innovations quickly, attracted by the speed, convenience, and reliability of these platforms. In our customer base, depositors range in age from 24 to 46, while our lending customers are typically aged 35 to 50. Younger customers are more inclined to save with us, while older ones tend to take out loans.
As customer mindsets shift, we expect younger users to become more engaged with loan products. Our app is designed to be intuitive and user-friendly, allowing customers to fund their wallets and transact independently, making it a great choice for tech-savvy individuals.
What are your final thoughts about the fintech landscape?
As the fintech sector matures, we expect significant changes in lending behavior, particularly among younger customers. VFD Microfinance Bank is committed to staying at the forefront of this evolution, continuing to innovate and adapt to meet our customers’ needs while maintaining robust growth and operational efficiency.
