The future of commercial banks is gradually slipping into the hands of telecommunication companies as the inroad into mobile money market by network providers is likely to make banks redundant soon.
The idea of allowing telcos to operate as mobile money service providers had been frowned at in the past, but all that is changing, as Central Bank of Nigeria (CBN) has come to realize that achieving its 80% financial inclusion is impossible without the likes of MTN Nigeria, Airtel, Glo and other telecoms firms.
Recall that the likes of Ifie Sekibo, Managing Director and CEO of Heritage Bank, Nnamdi Okonkwo, MD/CEO, Fidelity Bank, and some others have all stated that the presence of telecoms in the mobile money service brews no fear.
It would be unwise to bet against telecoms firms in the mobile money market, considering the position they hold and number of subscribers they each possess.
While banks had only until recently began to drive traction to their mobile payment platforms, network providers have been building their customer base since their entry into the Nigerian market.
In the telecoms sector, all network providers account for over 122.2 million subscribers, with interested mobile money operators such as MTN Nigeria and Airtel Africa accounting for 52.2 million and 31.9 million respectively.
This is more than the number of customers in GTBank, Zenith Bank, Access Bank, UBA and other banks. The total number of active bank accounts is 72.9 million.
GTBank, Zenith Bank, Access Bank all have about 1 million downloads, but note that not all downloaders make use of these apps, and having multiple apps for each bank account is stressful, so telcos provide a seamless payment system that doesn’t require multiple accounts or cards.
Since the function of banks is not limited to payment or financial transactions, one might think the bank’s relevance is still vital enough to be significant to Nigerians, however, the responsibility of providing loans to customers to help inject capital in the business is not restricted to Nigerian banks only.
While network providers only recently received the nod to operate mobile money without loan service, Fintech companies and Venture Capitalists have been offering needed capital to Nigerian businesses especially startups and have become perfect substitutes of banks for monetary needs; even rating agency, Moody, has argued that commercial banks might soon lose their services to Fintech firms due to their growing popularity.
This division of bank duties has reduced the essence of banks in Nigeria. Their monopoly over payment and monetary transactions has been lessened, and already, the inclination of the middle-class and lower-class towards them regarding loans isn’t favourable.