The Banks’ BIG Block

The Banks’ BIG Block

A few weeks ago, I wrote that the telcos, despite interventions from the telecom regulator, NCC, would have to recalibrate on what the banks want, on USSD revenue, and commission on airtime across channels (app, web, ATM, etc). Yes, I used the word “lose” for the telcos. My point is simple: the most united and fraternal institution in Nigeria is the Bankers Committee. In short, if you elevate them to the Federal Executive Council and they decide to fix Nigeria, we have a chance. When the Bankers commits, it is done.

We got these two updates from insiders

#1  – Happy Good Friday. Regarding the post below, the feud between MTN and the Banks is as a result of MTN writing all the Banks of reduction in airtime commission from 5% to 2.5% to take effect from April 1. All the Banks unilaterally rejected the reduced commission and responded to MTN to reverse the decision or their subscribers won’t be serviced from the Banks channel. The deadline to given to MTN by the Banks elapsed yesterday – April 1

#2 – The Bankers Committee actually shutdown the MTN E-top up channel because MTN according to the Committee has reduced their upfront discount from 4% to 2.5%, hence the Bankers feel edged out having been enjoying good profit from that channel.  Other MNOs didn’t tamper with their incentive on that channel, hence it is more of Electronic top up discount than USSD issue. Just giving you a heads up Boss.

Largely, the bankers have the capacity to set the prices and hold firm. But telcos are not strong enough to come together. And that playbook is playing: “A feud between Nigerian banks and MTN left millions of subscribers unable to recharge their phones using the USSD services on Friday, after banks shut off the telecoms firm over fees charged for the service.” What is happening there? The banks want what they want and if MTN cannot deliver, it is out of the channels. 

Yes, indeed. Before you can recharge your phone or buy data for browsing, you need to have money – and the banks keep that money. Technically, everything begins with the banks and if you do not align with them, you are off. The rumour is that MTN reduced commission and banks resisted.

And did you notice something else? Airtel, Glo and 9Mobile are not in the hooks. Banks would not have been in that dislocated position – unity of one is supreme in the sector! That is why banks decided to band together for BVN (bank verification number) instead of the disjoined SIM card registrations we did in the telecom sector. A more optimal model would have been – register a SIM card in Glo, and when in MTN, they can use that data and add you MTN Sim card instead of re-doing the whole data capture all over again.

Airtime loaded from app, USSD, etc is a big business in Nigeria and banks will not give up. Expect NCC and the Central Bank of Nigeria (CBN) to meet. But nothing will happen until MTN agrees to whatever the banks want. 

A feud between Nigerian banks and MTN left millions of subscribers unable to recharge their phones using the USSD services on Friday, after banks shut off the telecoms firm over fees charged for the service.

MTN advised its subscribers to seek alternative means of recharging their phones without informing them what the problem was.

“Dear Customer, our bank recharge channels are currently unavailable. Kindly recharge using physical cards. We apologise for the inconvenience. Thank you,” one message read.

Another read: “Please be informed that some of MyCustomers may not be able to purchase airtime and data recharges via banks including MOD and myMTN App. Please pacify MyCustomers and educate them to use MTNTopit, MoMo channels, as well as the debit card options on MOD or myMTN App.”

Phone users expressed their frustrations online as the outage lasted throughout Friday.


The Upcoming N42 Billion USSD Fight Between NCC And Nigerian Banks


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5 thoughts on “The Banks’ BIG Block

  1. My View on MTN recent crisis: This pain point would lead to the next phase of telecommunication in Africa with Nigeria as the first point. It’s becoming obvious that there would be a global disruption in that sector and the only way these players can have a grip of market share is when they come together in unity and partner like the banks did.
    Taking lesson(s) on success(es) of FinTech’s in the country, it’s obvious that they couldn’t have won without the traditional and regulatory bodies giving them licenses and the needed support to make this giant’s stride, so, extrapolating this would mean that Starlink -Elon musk initiative- or any of such who consider having a market here now or in the nearest future should have this tradition players in a partnership.
    The USSD clash goes beyond what many can see, there is need for foresight by players in this niche not just cost saving methods to boost revenue by executives.

    For your Information: Starlink is the brain child of Tech billionaire, Elon musk, with this he seeks to make internet accessible to all. With it first point of installation being Makah Indian reservation a remote area in Washington D.C. This innovation which is highly welcomed by resident of the region who have been in need of a strong internet service provider for their livelihood, also air their pain that although this product is satisfactory it’s expensive. The unemployment rate of the region is double digit and the resource to purchase and maintain this kind of gadget is unavailable to the average.

    So, this comes with implications that Starlink would have hard times breaking into certain market territory as their product would be seen as luxury regardless of the value they offer. To the end, I foresee other space technology startup coming into the scene which would be triggered by the shortage in supply of semi-conductor in the global supply chain (semi-conductor production has become a priority in the investment agenda of most countries, and this rain of cash would led to ambitious tech entrepreneur seeking way to tap into the disruption to come.)

    1. Great point indeed. The banks have a strong power in this economy. I expect the telcos to get closer after this episode. On Elon Musk and Starlink, let us see how it plays out. I still do believe that Satellite will be cheaper than GSM/fiber over time.

      (Pardon my last comment – I just noticed by reading you that I was referring to a different person with a similar name. Apologies).


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