Why Banks Are Reluctant to Acquire Fintech Startups Despite Growing Opportunities -

Stakeholders
have identified valuation differences, profitability concerns and mismatched
investment timelines as reasons banks in Nigeria are reluctant to acquire
fintech companies despite growing opportunities in the sector.

The issue was
discussed at the Africa Prosperity Summit 2026 in Lagos, where panellists
examined why banks and other large corporations have yet to play a bigger role
in acquiring technology startups.

Marene Dieng,
head of M&A, Strategy and Fintech Future at Axian Group, said corporations
often recognise the strategic value of fintech companies but struggle to
justify acquisitions when the expected financial returns are less attractive
than investments in their existing businesses.

“For us as a
corporation, unfortunately, it all comes down to numbers. We want to
participate in the ecosystem, but we have to prioritise profitability,” Dieng
said.

She explained
that corporations assess potential acquisitions through a ‘build, buy, partner’
framework, weighing whether to develop a solution internally, acquire an
existing company or partner with a startup.

Dieng said banks
and telecommunications companies sometimes find that investing in their own
distribution networks, infrastructure and existing operations offers better
returns than acquiring a fintech company.

She also
identified differences in investment timelines as a major obstacle. Venture
capital investors typically operate within fund lifecycles and seek exits
within specific periods, while corporations tend to take a longer-term approach
to investments.

“Some of the
investors who are on the cap table may want to see an early and quick exit and
a clean exit.

“Corporates are
very slow, and we’re very long-term investors. So often when we come in, we
will actually want the investors to stay with us for some time until some of
these promises are fulfilled and until we see that opportunity.”

Meanwhile, Ryan,
a partner at Google Scout, argued that venture capital is sometimes used to
finance businesses for which it may not be the most suitable funding option.

He said venture
capital is best suited to companies seeking to establish product-market fit,
build distribution and scale rapidly, rather than businesses with limited
growth potential or heavy physical asset requirements.

“VC is willing
to lose everything, but the trade-off is outsized returns,” he said, adding
that businesses using venture capital to finance debt books could be
misapplying the instrument.

Mustafa Amin,
co-founder of Egyptian online grocery platform Breadfast, highlighted the
challenges of financing businesses that combine technology with physical
infrastructure.

Using Breadfast
as an example, he explained that the company had to build its own supply chain,
including bread production and logistics, because relying on fragmented
suppliers would affect its ability to deliver a consistent customer experience.

Amin said the
company had relied largely on equity financing because traditional lenders
often struggle to assess the risks associated with businesses that require
significant investment in physical infrastructure.

The panellist
also highlighted the need for alternative financing options, including growth
capital and early-stage debt, to support African businesses that may not fit
the traditional venture capital model but still require substantial funding to
expand.

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