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The Central Bank of Nigeria (CBN) has granted conditional approval to MTN Nigeria and Airtel Plc to operate as Payment Service Banks (PSBs). The approval brings the mobile network operators (MNOs) closer to their fintech ambition to rework the financial technology landscape in what could tilt the competition against traditional banks.
The CBN gave its nod at the end of the week for MoMo Payment Service Bank Limited (owned by MTN) and SMARTCASH Payment Service Bank (Airtel) to operate. The approval is provisional and subject to the MNOs fulfilling certain “conditions.”
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The MNOs have confirmed the approval in separate statements. According to MTN, “This is the first step in the process towards a final approval, subject to the fulfilment of certain conditions as stipulated by the CBN.”
In October 2018, the CBN announced it would be granting approval for non-financial companies, including MNOs to apply for a mobile banking licence as part of the drive to increase financial inclusion.
The PSB is designed to bring financial services to more Nigerians by allowing operators to leverage their existing technology infrastructure. More than 90 million Nigerians are regarded as unbanked and could be effectively brought within the financial ecosystem through mobile banking on a fintech platform.
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While a number of fintech operators are already licensed, the market remains largely unexplored.
With PSB licence, both MTN and Airtel are expected to close the unbanked gaps leveraging their massive country-wide infrastructure and large customer base. By the record of the Nigerian Communications Commission (NCC), MTN rules the mobile market with close to 74 million subscribers while Airtel takes the third position after Glo with about 55 million subscribers.
Mobile money service is part of MTN’s overall strategy to strengthen its market grip. Even while it awaits PSB licence in Nigeria, the operator has deployed series of solutions enabled via partnerships to deliver a fintech services to consumers recording steady growth.
In 12 August 2021, it states “For the first half of the year, our Fintech revenue rose by 39.7%*. The number of active MoMo users increased by 2.6 million to 48.9 million compared to December 2020. The value of MoMo transactions was up by 88.3% to US$115.2 billion and we processed 17 292 transactions per minute (up 47.1% from 11 752 in June 2020). In Nigeria we added 121 000 agents to end the period with more than 515 000 registered MoMo agents.”
