Mobile money Acquiring a mobile phone and opening a bank account are two significant but separate events for many Nigerians. However, if Mobile Network Operators (MNOs) in the country successfully launch banking operations as planned, acquiring a mobile phone could mean owning a bank account without needing traditional banks.
“Banking in Nigeria remains an attractive sector, with over $9 billion in value pools, but despite high levels of competition, the vast majority of consumers are underserved,” according to McKinsey . Towards the end of 2021, the Central Bank of Nigeria (CBN) approved the country’s biggest MNOs, Airtel and MTN, to operate payment service banks (PSB) to serve customers better. 9mobile and Globacom were similarly granted approvals two years ago.
With these latest approvals, Nigerian fintech, as we know, may be facing potential disruption that will affect the entire value chain – from payments to lending and investments.
At the moment, the excitement for fintech in Africa is palpable. Of the $4.9 billion in total estimated funding to African startups, the fintech vertical accounts for nearly $3 billion , with Nigeria as the top funding destination. From crypto startups to neo-banks, the movement of money aided by digital technology in Nigeria attracts attention from different quarters. Stakeholders, including MNOs, seek to derive their share of the sector’s rapidly expanding value.
The potential for true financial inclusion
Granting MNOs a license to operate payment banks deepens financial inclusion in Nigeria. Over 38 million adults in Nigeria still do not have access to banking services, with ‘women, youth, rural dwellers Micro-, Small and Medium-sized Enterprises (MSMEs) and Northern Nigeria’ being the most disproportionately excluded demographics, according to the CBN .
Whilst the recently launched e-naira has been presented as a critical enabler for financial inclusion, telco-led banks seem better positioned to achieve this. MNOs can leverage their vast connectedness across the country (including their availability in many remote areas), financial muscle, experience serving the masses, and access to comprehensive user data.
Nigerian mobile network operators have a massive agent network that they continue to grow and leverage for financial services. For example, MTN has over 515,000 agents across Nigeria; combined with their massive data and reach, mobile operators, are better equipped to handle the distribution of financial services to the financially excluded.
To illustrate: With telco-provided banking services, residents of a remote village without bank branches can open financial accounts, send and receive money via their mobile phones, […]