Is MTN Mobile Bank a Disruptor?


Despite being famous for its quick adoption of technology and innovation, a major shakeup is coming for the Nigerian banking industry.

A disruption which has finally surfaced barring any last-minute change or a force majeure could see major lenders and financial service providers in Nigeria fighting for their ‘dear lives’.

Last week, Nigeria’s largest mobile carrier MTN Nigeria Communications Plc said it has finally acquired its “super-agent” license for its widely-publicized mobile money subsidiary.

Also known as mobile money, mobile money transfer or mobile wallet generally refer to payment services operated under financial regulation and performed from or via a mobile device.

On the surface, this is no news and our article is just another noise about nothing. Well, if you can discern the undertow the MTN Mobile Money would swim in, you will understand that a major shakeup is in the offing for the temperate financial services industry.

Emerging from its chequered regulatory challenges, MTN has always fixated its target on mobile-driven financial services for obvious reasons. While MTN had tried to offer some sorts of mobile money services via its partnership with Access Bank (former a Diamond Bank before the merger) called Yhello Account, it could not offer a broader bouquet of financial services because it lacked the regulatory license to do so.

This time around, MTN will now be able to use its existing infrastructure, retail networks as well as partnerships to set up a full-fledged mobile bank that will enable it process fund transfer, payments, savings and even investment services.

Here is why this is a major disruption- If its mobile bank starts as you are reading this article, MTN has ‘stockpile’ of over 67 million customers it can reach at the speed of lights via SMS, mobile ads and other service bundles to onboard them as customers. According to the latest data from the Central bank of Nigeria (CBN), the total number of unique bank accounts is just about 36.8 million accounts linked to the bank verification number (BVN).

This means MTN Mobile Money could reach about double of the total number of customers owned by all Nigerian banks as a whole. The timing of MTN’s emergence into the financial services industry is also very pivotal given a three-year re-focusing by banks to target the micro-market, millions of unbanked population as well as the race to make more money from non-interest income such transactions, payment processing and money transfer.

The next few months will see major proactive and reactive pressures from banks as well many fin-tech startups who are largely exposed to the newly emerging transactional, payment and money transfer end of the market.

However, it needs to be stated that because banks have priced in the eventual arrival of MTN into the scheme of things, it will never be a ‘walk in the park’ for Nigeria’s largest mobile carrier. Bearing in mind that everything begins with the subscriber identification module (SIM) cards, a major risk point for MTN is security and consumer privacy protection.

Also, Nigerian banks are known globally to be one of the most secure and ahead of many Western markets in terms of privacy and security through the adoption of various technological innovations. MTN Mobile Money will need to prove that it can earn this enviable badge given the fact that it will be operating within the peripherals existing banking and technology infrastructure.

First published on NEXTGEN, a weekly newsletter of SBI Media Limited