In a Harvard Business Review piece last week, I wrote thus: “These companies aggregate the data and scale massively with near-zero marginal cost, which is all made possible by the internet. Because they are ahead with an enormous number of users, they keep getting better, and the data they accumulate drives improvements in their algorithms. Changing this order is largely hopeless, and that creates a competitive stasis for local entrepreneurs”. Many have sent emails asking for the explanation.

The point is that if you can build an internet business where growth and revenue could grow without escalating marginal cost [transaction + distribution cost], you would have success. In other words, if the cost of serving an extra user is very small, you can scale very fast. It does not cost Facebook anything for adding an extra user in its platform. But it does cost an ecommerce firm operating in Lagos to serve an extra user in Yola [there is a limit you can ask a customer to pay shipping cost before he/she decides to choose a local supermarket]. To avoid that marginal cost, the ecommerce firm would just make its service not available in Yola. When that happens, it is no more a real internet business.

I try to explain this in a plot below (breaking this].

Wema’s ALAT can help you open a bank account. Just like that, via your smartphone, you can have a new bank account. Other bank apps have such features. But they have to look for those customers. The question is thus: why not make it possible so that any customer account in Jumia, Konga or Yudala could be offered a bank account?

Yes, interesting. As we move into personalization and deepening of our national identity, I see opportunities where vertical partnerships would emerge for banks. If you are a merchant that grosses over N2 million monthly, you would login into your Jumia account to see a button that says ‘Open a Bank Account”.

Because Jumia has all your data, you hit “Apply”. Within minutes a bank account is ready from say Diamond Bank. Why would you do that? Jumia promises you that any balance in your account is immediately going to be earning interest from Diamond Bank.

Great things would happen in the land. We need to improve our national identification. BVN is working on that. We would experience a new level of innovation in partnership.

I believe that banks do not need to do most things they are doing today – they just have to explore smarter partnerships. The key to making these ideas work would be automation, AI and personalization. It is a global trend with JP Morgan committing $10.8 billion on annual tech spending.

We are at the early phase of the redesign. As Zenith Bank and Ecobank work with Facebook and Mastercard, expect your Facebook account to become ideally a “bank account”. If they push it a little more, you can get a bank account from a real bank via your Facebook account, depending on the transaction volume Facebook Corp has captured over time on this partnership. If you bring the banking services to Facebook, why not allow new people to join via Facebook?

One of the biggest entrepreneurial opportunities in Nigeria over the next few years would be identifying and validating Nigerians online. Just that it has not been done reminds me that in this land we have massive latent opportunities for glory.