Nigeria banks jittery as MTN moves into mobile banking

Deposit money banks in Nigeria has been at alert after top telecommunication company MTN announced that they will soon be launching a mobile banking platform come next year 2019 and are in the process of obtaining a Payment Service Bank license. This new development is expected to make the business environment more difficult for lenders and other telecommunications company may even follow suit.

The New Telegraph reported a senior industry player saying ”By obtaining a PSB License, MTN’s subscriber base of about 50 Million will have an edge over most banks. Actually, many of the telecommunications company can make these services more accessible than most banks”. This implies that retail banking will now be tougher for lenders.

According to the source, there are certain worries about the Central Bank’s ability to control the telecommunications that seeks PSB license to set up a mobile banking platform. In his words he said ”Though the Central Banks guidelines restricts PSBs from giving out loans, advances and guarantees, it is still possible for telecommunications to offer this kind of services without going against the CBN policies. We have heard of many telecommunications companies seeking the license, the banking industry may experience the pre-consolidation period like during 2004/2005 when Nigeria had over 80 banks”

Just few weeks before now at a conference held in South Africa, Rob Shuter, CEO MTN Group revealed that the company is going to apply for a license in Nigeria and equally launch the mobile banking service come next year 2019. He had earlier stated in January 2017 that the company has plans to make MTN the biggest bank in Africa. He said the company has decided to invest its money into the mobile banking service. Also, the mobile banking service will be of high advantage to the company as they have already set up informal distribution network that handles prepaid airtime and introduces the customers to the banking system as it is very similar to it.

While making comments about the worries of the deposit money banks, Dr. Boniface Chizea, CEO of Bic Consultancy Services stated that telecommunications are already at advantage due to their huge spread of subscriptions. In accordance to this, Dr. Uju Ogubunka, former registrar and Chief Executive of the Chartered Institute of Bankers of Nigeria (CIBN) and current President of the Bank Customers Association of Nigeria (BCAN) said that it is ok for the deposit money banks to express concerns. According to him, if the telecommunication companies do not gain full license to carry out these services, there would be no need to worry. But if they do, it would be a serious threat to the said banks. However, he made it known that he is not really concerned about the competition that may go on between the deposit money banks and the telecommunication companies as he is open to accept whichever that will provide good financial services to Nigerians.

Mr. Henry Atenega, the Principal consultant of Henates and Associates also spoke on the issue. He believes the banks should be troubled because the telecommunications are better positioned than them.