- Mobile Money: Banks Risk Losing Customer Base to Telcos
As mobile telecommunication companies are gearing to support the financial inclusion drive of the Federal Government, Nigerian banks and fintechs in the payment industry risk losing their customer base to telcos, analysts have said.
Analysts who spoke with The Punch correspondent on Wednesday said the ubiquitous nature of network operators placed them at an advantage over Nigerian banks.
According to them, the ability of telcos to reach the unbanked population and under-banked communities faster than any other fintech or financial institution would help the Federal Government to achieve the 80 per cent financial inclusion target by 2020 quickly.
The Central Bank of Nigeria had granted telecom companies a provisional approval to apply for a Payment Service Bank licence through a subsidiary company and make a minimum capital deposit of N5bn following an advocacy by the MTN, Airtel, Globacom, 9mobile and Ntel to drive the initiative and reach 90 million Nigerians by 2020.
Speaking on the growing interest of mobile network operators in the scheme, the CEO, Upperlink Limited, Mr Segun Akano, predicted that the participation of mobile network providers might cause a reduction in the number of Nigerians banking with financial institutions.
According to him, the ultimate goal of the CBN will be achieved as the expansion of payment services to telecom companies will increase the velocity of money in circulation.
“Even though banks may lose some percentage of customer base to telcos, ultimately, there will be an aggregate improvement in terms of speed or velocity of money in circulation,” he added.
Despite this threat, Nigerian banks are not letting down their guards as they are actively introducing innovative solutions to increase their customer base.
Fidelity Bank, for instance, has reportedly projected 300 per cent growth in its customer base this year through the promotion of financial inclusion while First Bank reportedly plans to double its customer base by 2020 with digital banking.