Your phone is smart because it can be used for practically anything; from shopping to driving, reading, banking, you name it. It wasn’t always so. Invented for communication in its purest form – making and receiving calls and sending and receiving Short Message Service (SMS), over the years the phone has evolved into something more, something smarter.
This advancement in mobile technology has opened the global economy to opportunities. One sector that has been greatly impacted is the banking system, especially in the area of Agency Banking and Fintech, which has seen innovations such as mobile banking used to drive an inclusive financial sector. Nowadays all you need for banking transactions is a smartphone. Or in the case of Agency Banking, a simple feature phone like the MTN Smart.
You can now conduct financial services via mobile wallets, payment apps, online lending and agent banking platforms such as the MoMo Agent, a financial services product belonging to MTN Nigeria’s subsidiary, the Y’ello Digital Financial Services (YDFS) Ltd. Judging by the successes recorded from these innovations, the MoMo Agent for example, several financial experts have predicted the demise of banks. Although this is arguable, the mobile and feature phones on the other hand will definitely play a continuous role in this banking evolution.
This is possible on the one hand as a result of the advancement in mobile technology that has opened the financial services sector to other players other than the traditional banks, such as the telecommunications companies. Two, Nigeria’s Central Bank has been supportive in its partnership with the telcos through the industry regulator, the Nigerian Communications Commission (NCC), in leading the financial inclusion drive in the country.
In 2012 the CBN adopted the National Financial Inclusion Strategy (NFIS) to reduce the rate of adult Nigerians who are financially excluded from 46.3 percent in 2010 to 20 percent in 2020. Also, in 2013 the apex bank released the Guidelines for Agent Banking and Agent Banking Relationships, followed by the Operating Framework for Super Agent in 2015. Prior to these policies, the CBN had sometime in 2007 crafted the Payment Systems Vision (PSV) 2020, which it revised in 2018 through an MoU with the National Communications Commission (NCC) that opened banking services to the telecommunications industry.
In October 2018, the CBN published a guideline allowing for the establishment of Payment Service Banks (PSB); an offshoot of the PSV initiative and which are expected to leverage on mobile and digital services to provide financial services and enhance inclusion for the financially excluded segment, especially at the rural areas. Through the PSV 2020, the CBN aims to leverage the distribution networks of non-bank entities such as mobile network operators and others, to reach the financially excluded and bridge the inclusion gap.
Considering that bank branches in the country were reported by the World Bank in 2016 to be at 5.3629 per 100,000 adults, the CBN’s Agent Network policy is a laudable initiative.
Due to their large subscriber base, telcos are better placed than commercial banks to drive the CBN’s financial inclusion plan. According to the Nigerian Interbank Settlement Scheme, Nigeria has 72 million active bank accounts. You might think this huge, except that as at February 17, 2019, only 37 million of these are linked to a Bank Verification Number (BVN). In contrast, there are over 168 million telecom subscribers.
Among the telcos, with its over 61 million active subscribers; 98 percent connectivity across the country; over 23,000km fibre optics backbone that supports 100 plus ISPs; providing connection to over 100,000 ATM’s, POS and other electronic payment services, and driving business transaction via the use of USSD code on its platform, accounting for N75 trillion worth of transaction in 2018 alone, MTN is a key driver to the CBNs cashless policy, and has the infrastructure to bring financial inclusion to millions of unbanked Nigerians.
Fully aware of this, and following the liberalisation of the banking industry, MTN through YDFS, on August 29, 2019 launched the MoMo Agent. The service provides financial access to customers in easily accessible retail outlets across Nigeria. Leveraging the MTN existing network, the MoMo Agent will be accessible through basic mobile services.
From Ibadan in Oyo State to Kano and Owerri in Imo State, the reception to the MoMo Agent has been tremendous. The ease and proximity that the service affords the busy traders has worked to the advantage of YDFS. Ideally, several of these traders have their markets where they do business situated far from bank branches, making it difficult to access banking services. However, with MoMo Agents operating from anywhere, including the markets, traders now have access to banking services and can now send and receive money anywhere, and with incredible ease.
Although the uptake of the agent banking services is still at its infant stage, as it kicks off fully, a more financially inclusive Nigeria is expected to experience a boost in GDP, and significant amounts of new credit for SMEs. Judging from recent events during the regional launches and sensitisation campaigns across the country, and the reception the MoMo Agent has received and continues to receive, it appears that time might be closer.
Adebola Balogun
Balogun is a tech enthusiast, and contributed this piece from Lagos.
