That shift is now playing out at Sycamore, the Nigerian fintech startup that is aggressively expanding beyond digital lending after acquiring a microfinance banking licence.
The company says it is now focused on building a deposit base that could eventually exceed ₦40 billion as it transitions into a broader regulated financial services group.
Speaking in an interview on Tuesday, Sycamore’s chief executive officer, Babatunde Akin-Moses, said deposit mobilisation would become one of the company’s biggest strategic priorities following the acquisition of an undisclosed Kano-based microfinance bank.
“Deposit mobilisation is going to be very critical,” Akin-Moses said.
Fintechs Increasingly Pursuing Banking Licences
Sycamore’s move reflects a growing trend across Nigeria’s fintech ecosystem, where startups are increasingly acquiring microfinance banking licences to gain access to cheaper funding sources and deeper control over financial infrastructure.
Over the past year, several fintech firms have moved aggressively in that direction. Flutterwave recently secured a microfinance banking licence following its acquisition of open banking startup Mono, while Paystack acquired Ladder Microfinance Bank earlier this year as competition intensifies around customer deposits and digital banking services.
For many fintechs, the motivation is straightforward: relying on commercial banks for wallets, settlements, and customer accounts limits operational control and increases funding costs.
The acquisition allows Sycamore to move away from that dependency.
“We are already using third-party wallets today,” Akin-Moses explained. “It is just that we do not control those wallets right now.”
With the new licence, Sycamore will gain direct integration into the Nigeria Inter-Bank Settlement System Instant Payment platform, enabling it to offer real-time transfers, deposit accounts, and payment services directly to customers.
Lower Funding Costs Could Mean Cheaper Loans
Beyond operational control, access to deposits could significantly reshape Sycamore’s lending economics.
Historically, the startup has funded its lending operations largely through institutional debt and commercial paper issuances — funding sources that often come with relatively high costs.
Customer deposits, however, represent a far cheaper and more stable source of capital.
“Every single sort of money that comes to the platform comes with a significant lender cost,” Akin-Moses said. “But now for deposits, we will be able to have those at cheaper costs.”
According to him, reducing funding costs could eventually allow the company to offer more affordable loans to borrowers.
“And the whole idea is that we should be able to eventually pass those cheaper costs on to our borrowers as we grow,” he added.
The company is targeting between ₦40 billion and ₦50 billion in loan disbursements this year and believes it will need deposits that exceed those figures to sustainably support its growth ambitions.
Akin-Moses said Sycamore aims to maintain deposits roughly 30% to 50% above projected lending volumes.
Bigger Loans, Bigger Ambitions
Sycamore’s growth trajectory also reflects rising demand from Nigerian businesses for larger financing facilities amid inflationary pressures and growing operating costs.
According to the company, it disbursed nearly ₦20 billion in loans in 2025 and intends to at least double that figure this year.
Its average loan size has increased sharply as well.
Where the company previously issued average loans of around ₦10 million — with a maximum limit of ₦20 million — average ticket sizes have now climbed to between ₦30 million and ₦40 million. Sycamore has also expanded its maximum loan size to ₦100 million.
“Apart from increased capacity of our balance sheets, which is part of why we raise money in commercial paper, the whole idea is that people need more,” Akin-Moses said. “Businesses need more.”
The broader digital lending market in Nigeria has also experienced rapid expansion. FairMoney disclosed that it disbursed more than ₦150 billion in loans in 2025, while Moniepoint said it issued over ₦1 trillion in loans to small businesses during the same period.
Northern Nigeria Becomes Strategic Growth Market
One of the more notable aspects of Sycamore’s expansion strategy is its growing focus on northern Nigeria.
The company says its decision to acquire a Kano-based microfinance bank was influenced partly by the opportunities it sees in the region, where adoption of digital savings and investment products remains relatively low compared to southern commercial hubs like Lagos.
According to Akin-Moses, scaling in northern Nigeria will require a more localised approach that combines physical operations with stronger community trust and culturally adapted financial products.
“We are looking to modify some products to be more Islamic-compliant,” he said. “We do have a physical office in Kano to make that agenda a reality. We bought a Kano-based MFB because of the opportunity there.”
Unlike many Lagos-based fintechs that grew primarily through digital acquisition channels, Sycamore believes northern expansion will require more on-the-ground engagement and hybrid distribution models.
Diaspora and Acquisitions Next on the Radar
Beyond Nigeria, Sycamore is also exploring opportunities within the African diaspora market, particularly in the United Kingdom and Canada.
The company sees potential partnerships and lending opportunities in the U.K., while Canada is being considered as a possible investment-focused market targeting diaspora users seeking wealth-building products.
“We see that as a potential opportunity to partner with some UK-based companies, even have some sort of UK presence,” Akin-Moses said. “Canada will be looking at it like the market for investments for diasporas.”
Sycamore also hinted that acquisitions could remain part of its long-term expansion strategy as competition intensifies within Nigeria’s fintech ecosystem.
“One of the trends we are seeing this year is acquisitions,” Akin-Moses noted. “If there is some capability we are trying to build, we do not always have to build from scratch.”
For now, however, the company’s most immediate test may not be technology or regulation — but trust.
As Sycamore evolves from a digital lender into a deposit-taking financial institution, its success could ultimately depend on whether customers are willing to place tens of billions of naira into a fintech brand that is still building its banking identity.