Segun Agbaje, chief executive officer of Guarantee Trust Bank (GTBank) said that jostle by telecoms companies to secure Payment Service Banks (PSBs) license from the Central Bank of Nigeria (CBN) does not represent disruption.
It will only be disruption if the service did not already exist, he says.
Telecoms companies such as MTN, Airtel and Globacom are known to be preparing for a future in mobile banking services following the CBN’s announcement in 2018 that it will be issuing licenses to Payment Service Banks. The PSB license is seen as the final hurdle for the telecoms companies to play in the space and which will also boost efforts to provide financial services to millions of Nigerians who are excluded for one reason or the other.
But since the CBN made the announcement, different experts have suggested that the coming of big non-banking companies into the space will bring about a disruption of banking services the range of which fintech companies have been unable to achieve. Nigerian banks have been quick to respond to the supposed fintech companies’ threat to their business. Today, banks have more fintech products and services that are reaching more people compared to startups in the fintech, many of have to collaborate with banks to survive.
Agbaje alluded to this during his presentation on the second day of the ongoing Social Media Week Lagos 2019. “We have disrupted those who felt they were coming to disrupt us.”
Telecoms companies are projected to shake things up by marching banks’ dominance of digital banking by leveraging their appreciable customer base and financial ability.
However, the GTBank boss who in a recent report released by the bank described the telecoms companies as a “more compelling threat,” suggested that their coming is likely to distract from an opportunity to ‘disrupt’ Nigeria’s internet data industry.
“We need the telcos to bring the price of data down,” says Agbaje. “Getting a PSB license isn’t disruption because that is already being done. What is disruption is for a telco to be bold enough to reduce cost of data.”
About 111 million Nigerians are on the internet everyday according to data from the Nigerian Communications Commission (NCC) however people still pay very high to have access to internet data in Nigeria.
A report released by Ecobank in 2018 showed that Africa has the most expensive mobile data in the world, both in real and income-relative terms. Fortunately, Nigeria was classified as one of the countries on the continent with the cheapest mobile data with $2.76 per 1 gigabyte. But it is still high compared to peers like Ethiopia, Tanzania, Burundi, Kenya and Rwanda which has an average $1 per gigabyte.
Nigeria also lags behind in terms of speed of internet. Speedtest global index statistics for May 2018, ranked Nigeria as low as 108th in the world on mobile internet speed at a download speed of 10.04 and upload speed of 9.35 megabytes per second (Mbps). The global average download speed is at 23.57 Mbps.
Tunisia, Morocco, Egypt and Kenya were ranked 71st, 72nd, 85th, and 87th respectively with download speeds of 19.21, 18.52, 15.89 and 15.39 Mbps.
Telecoms companies always point to challenges such as Nigerian government’s inability to effectively address Right of Way policy which impacts their cost of operation as responsible for the quality of internet service they deliver.
“I don’t think Right of Way is enough excuse for the high cost of internet data in Nigeria,” Agbaje said.
He believes telecoms companies should look within and disrupt themselves just as the banking industry is doing.
“People need banking and not banks and financial institutions that operate in the traditional mode, will not last for too long,” he said.
