MTN Nigeria and Airtel are putting plans in place to go live as payment service banks (PSBs) in 2022, once the Central Bank of Nigeria grants them the final licence. The two telcos would however face uphill tasks replicating the success of Safaricom in Nigeria, according to experts at Coronation Asset Management.
When in 2018, MTN and Airtel picked up the form for payment service bank licence (PSB) there were obvious gaps and opportunities in mobile money in Nigeria. Incumbent players like OPay, Palmpay, and many other operators were just opening shops. Agent banking hadn’t become ubiquitous as it is today.
Read also: How new PSBs will disrupt Nigeria’s financial landscape
The Shared Agent Network Expansion Facility (SANEF) by the Central Bank of Nigeria was only expanded in 2018 with banks leveraging the platform to deploy banking agents at scale. The expectation of the telcos had been to get in early on the mobile money scene and deploy at scale.
Rob Shuter, MTN CEO in 2018 had described the size of the telco’s ambitions for mobile money. According to him, MTN wants to build mobile money into a 60 million customer business in the next three to four years.
“We will be the largest bank in Africa, leveraging scale, network, brand, infrastructure, and distribution,” he said. Then the company had its sights at beating Safaricom
But the market in 2007 is not the same market in 2021, say the experts at Coronation in a report shared with BusinessDay. For them, the reason is that when Safaricom began to make transfers on behalf of customers with its product M-Pesa, there was almost no competition in that space.
M-Pesa was launched in 2007. Even some Kenyan banks had issues making money transfers from one part of the country to another at that time, so Safaricom could provide services they were unable to in some product areas. One point that was noticed during M-Pesa’s launch was that mobile customers were already using their telephone credits to make transfers with one another – telephone credit was already a proxy for cash.
Telephone credit is not a big deal in Nigeria and the competitive landscape is very different. In Nigeria, banks are as innovative as fintech companies. In some cases, banks are out-innovating fintech companies leveraging their seemingly limitless financial resources. For instance, banks dominate the chat banking innovation and are competitive in mobile banking transactions. They have many online and mobile banking services at their disposal.
“In the payment services space, there are already giants like Flutterwave. In mobile money, there are significant players such as Opay and PalmPay. In some cases, the business model aims to gain the maximum number of mobile customers, with short-term profitability, not the objective,” the experts say.
MTN and Airtel making their debut in 2022 would be coming into a crowded market.
“This is not to say that a PSB license is not enormously valuable to Nigerian telecoms companies, and there is likely to be a slice of extra revenue for them. It will be very difficult to replicate Safaricom, however,” they said.
