On July 14, Nigerian fintech Gigbanc announced it was closing shop after three years in operation. The same week, the CBN revoked licenses from multiple microfinance banks. For freelancers and small-business owners holding dollars in digital wallets and cards, these failures raise an urgent question: what actually happens to your money when a fintech dies?
The short answer is: it depends on how your money is held, and whether the company had proper safeguards. But the longer answer—and the one that matters—is that you have more protection than you might think, and some practical steps you can take right now.
How Fintech Failures Happen
Gigbanc's closure came after three years of operations. The company had offered digital banking services to Nigerian customers, but like many fintechs, it likely faced mounting operational costs, regulatory pressure, or user-acquisition challenges that made the business model unsustainable. The CBN's license revocations of microfinance banks followed similar patterns: institutions that couldn't meet capital requirements, compliance standards, or deposit-protection obligations.
These aren't rare events. Fintech mortality is real. But the key question isn't whether fintechs fail—it's whether your money is protected when they do.
Where Your Money Actually Lives
This is the critical distinction most users don't understand. When you deposit money into a fintech wallet or card, your funds might be held in one of three ways:
1. Held in trust at a licensed bank. Many regulated fintechs (like LCash) don't hold customer money directly. Instead, they partner with licensed deposit-taking institutions and hold your funds in segregated accounts. If the fintech fails, your money is technically the bank's liability, not the fintech's asset. This is the safest structure.
2. Held by the fintech itself as a licensed deposit-taker. Some fintechs have their own banking licenses or microfinance licenses and hold deposits directly. When these entities fail, the CBN's Deposit Insurance System (which covers up to ₦500,000 per depositor per institution) kicks in—but only for naira deposits, and only if the institution is registered with the NDIC.
3. Held in a custodial arrangement with unclear terms. Some smaller or less-regulated fintechs use loose custodial setups. If the fintech fails and the custodian is not a licensed bank, recovery becomes messy and uncertain.
What the CBN Actually Protects
Nigeria's Deposit Insurance System protects naira deposits up to ₦500,000 per depositor per institution. This is important: it covers naira held in licensed banks and microfinance banks registered with the NDIC, but it does not automatically cover dollar deposits or funds held in unregulated custodial arrangements.
However, if a fintech holds your dollars in a segregated account at a licensed international bank (as many dollar-focused fintechs do), your dollars are protected by the bank's own capital and regulatory framework, not by the NDIC. The bank's failure would be an entirely different (and much rarer) event.
The CBN has also been tightening oversight. In recent weeks, it revoked microfinance bank licenses and is pushing fintechs toward stronger capital buffers and compliance. This is making the system safer, not weaker—failures now tend to happen before deposits are at serious risk.
What You Should Do Right Now
Check who actually holds your money. Log into your fintech app or website and look for disclosures about where deposits are held. Regulated fintechs are required to disclose this. If you can't find it, ask customer support directly. The answer should be: "Your money is held in a segregated account at [licensed bank name]" or "We are a licensed deposit-taker registered with the NDIC."
Diversify your fintech holdings. Don't keep all your dollars with one fintech. If you're holding significant amounts, split them across 2–3 regulated providers. This isn't paranoia—it's sensible risk management.
Keep records. Screenshot or download statements showing your balance and the fintech's deposit-holding arrangement. If something goes wrong, you'll need proof of what you held and where.
Prefer fintechs with bank partnerships. When choosing a dollar wallet or card, favour providers that explicitly partner with licensed banks for deposit holding. These tend to have stronger regulatory backing and clearer recovery paths if something goes wrong.
The Bigger Picture
Gigbanc's closure and the CBN's license revocations are not signs of a broken system—they're signs of a system that's starting to work. The CBN is actively removing weaker players and enforcing higher standards. This is uncomfortable in the short term but protective in the long term.
For dollar earners in Nigeria and Kenya, the practical takeaway is this: fintech failures will happen, but your money doesn't have to disappear with them. The key is knowing where your money actually lives and choosing providers that hold it safely.
If you're using a regulated provider with clear bank partnerships, you're protected. If you're uncertain, now is the time to ask questions and move if needed. Your dollars are too important to leave to chance.