Nigeria Enters Banking 3.0 Era

Nigeria Enters Banking 3.0 Era

Before the golden decade (1990s) of Nigerian entrepreneurship, there were banks. Those banks became known as old generation banks because new ones emerged in 1990s, disrupting the then banking order with superior customer experiences. During the 1990s, some of the elite banking institutions we have in Nigeria today were established, from Zenith Bank to GT Bank to UBA (nee Standard Trust Bank).

Unlike the golden decade (the 1990s) of Nigerian entrepreneurship when amalgams of new generation banks were born, seeding a new age in the nation’s financial system, this moment cuts across sectors.

The old generation banks made up Banking 1.0 era for Nigeria; the new generation banks gave us Banking 2.0. Now, the Banking 3.0 era is here as MTN pursues a Mobile Banking license. This is a very huge redesign in the industry as if you have telcos like MTN coming into the financial sector when fintechs in all different forms are already enabling dislocations, new bases would be established. Flutterwave and Paystack are threats because most fees earned by the fintechs are largely lost revenues to the banks. I make this statement since the fintechs are not necessarily expanding the customer base by going to the unbanked or underbanked. Yes, they are focusing on the upper middle class which has been the engine that supports the fat bank profits for years.

MTN Group will apply for a mobile banking license in Nigeria and launch a service there next year, its CEO said on Tuesday, further embedding the South African telecoms company in its biggest but increasingly problematic market.

“We will be applying for a payment service banking license in Nigeria in the next month or so, and if all goes according to plan, we will also be launching Mobile Money in Nigeria probably around Q2 of 2019,” Rob Shuter told a telecoms conference in Cape Town.

Yet, even in this notice, we can see a glimmer of positives: MTN Group remains committed to Nigeria despite the recent challenges. By next year when MTN Nigeria launches the mobile banking service, it would be the largest “banking institution” in Nigeria by customer base since on day one, MTN Nigeria may have excess of 55 million “banking” customers compared with about 15 million First Bank, the largest in that category, commands. This is not a surprise: I have noted that 2022 would be the year of convergence (see video above) in Nigeria. We are going to see all kinds of redesigns as our Cambrian Moment elevates.

1990s was the decade of banking.

2000s was the decade of voice telephony.

2010s is the decade of broadband.

2020s would be awesome. From technology to agriculture, finance to entertainment, entrepreneurs would hit it big. There is a convergence happening right now and most of the pieces would sync. Our payment infrastructure would mature, the connectivity would improve and investors would come to party.

Payment Service Banks

MTN Nigeria is taking advantage of the new CBN policy: Payment Service Banks.



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