Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Britehouse breaks free from NTT Data

      10 July 2025

      Samsung’s bet on folding phones faces major test

      10 July 2025

      OpenAI to launch web browser in direct challenge to Google Chrome

      10 July 2025

      The satellite broadband operators taking on Starlink

      9 July 2025

      Yaccarino out: Musk’s handpicked CEO quits X suddenly

      9 July 2025
    • World

      Grok 4 arrives with bold claims and fresh controversy

      10 July 2025

      Cupertino vs Brussels: Apple challenges Big Tech crackdown

      7 July 2025

      Grammarly acquires e-mail start-up Superhuman

      1 July 2025

      Apple considers ditching its own AI in Siri overhaul

      1 July 2025

      Jony Ive’s first AI gadget could be … a pen

      30 June 2025
    • In-depth

      Siemens is battling Big Tech for AI supremacy in factories

      24 June 2025

      The algorithm will sing now: why musicians should be worried about AI

      20 June 2025

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025
    • TCS

      TCS | Connecting Saffas – Renier Lombard on The Lekker Network

      7 July 2025

      TechCentral Nexus S0E4: Takealot’s big Post Office jobs plan

      4 July 2025

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      3 July 2025

      TCS+ | First Distribution on the latest and greatest cloud technologies

      27 June 2025

      TCS+ | First Distribution on data governance in hybrid cloud environments

      27 June 2025
    • Opinion

      In defence of equity alternatives for BEE

      30 June 2025

      E-commerce in ICT distribution: enabler or disruptor?

      30 June 2025

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CambriLearn
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Fintech » Late to fintech boom, Nigerian banks turn to regulators for help

    Late to fintech boom, Nigerian banks turn to regulators for help

    By Agency Staff20 April 2021
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp
    Skyline in Lagos, Nigeria. Namnso Ukpanah/Unsplash

    Nigerian banks’ dominance of their home turf is virtually unparalleled. Largely protected by regulators from foreign competition, Nigerian lenders control 94% of their domestic market, by assets, the world’s largest share of local ownership after Israel, according to a report published before Covid-19 hit in 2020 by Chris Ogbechie and Lilac Nachum, scholars at Lagos Business School.

    But the threat is now homegrown. Nigerian banks are only now starting to counter the emerging fintech firms riding the online wave spurred by the pandemic. As they set out their mobile money ambitions, they’re deploying their political muscle with regulators to bolster the moat around their franchises.

    “Some might claim there is pushback from traditional banks and their regulatory ally to restrict financial innovation by fintechs,” says Abubakar Idris, analyst at Stears Business, a Lagos-based consultancy for financial and technology companies. “If the largest telcos get a banking licence, they could undercut the banks.”

    The simmering conflict broke into the open this month when lenders kicked MTN Group off their shared platform

    The simmering conflict broke into the open this month when lenders kicked MTN Group, Africa’s largest mobile phone company, off their shared platform, protesting a cut by the telecoms provider on commissions charged on banking channels by almost half to 2.5%. Regulators intervened to reconnect MTN customers, while reinstating the 4.5% commission for the purchase of airtime bought via the banks.

    The sparring means the 60 million people in Africa’s largest economy who lack access to any banking services risk missing out on all the benefits of the fintech boom that has put much of Africa at the cutting edge of the revolution in mobile money.

    Investors jump in

    Anticipating the underserved entering the market, foreign investors have jumped in. Flutterwave, based in Lagos and San Francisco, raised US$170-million this year. That made it Nigeria’s second fintech start-up with a valuation above $1-billion, after Interswitch. Jumia Technologies, a Berlin-based e-commerce platform that started in Lagos, has almost tripled since it sold shares in New York in 2019, giving it a market value of $3.4-billion.

    The investment in Flutterwave by US hedge fund Tiger Global Management and New York private equity firm Avenir is more than double the ₦26-billion (R915-million) spending on IT by Nigeria’s two biggest banks in 2020. The two lenders spent ₦13.7-billion in the year earlier.

    That helps explain why lenders including Guaranty Trust Bank and Access Bank, the country’s two biggest, could use some help from regulators. They’re planning to start payments units this year, more than a decade after counterparts in Kenya and South Africa.

    While the government has opened up the industry to telecoms companies to increase access to banking services, the Central Bank of Nigeria has yet to approve payment service licences to MTN Nigeria Communications and Airtel Africa; it’s been about two years since they applied for the permits, which allow them to provide most banking functions except lending and taking foreign currency deposits.

    The central bank has been “lethargic” when it comes to allowing mobile operators to become “very important players” in the payment system, Yele Okeremi, CEO of Precise Financial System, a Lagos fintech, said by phone.

    Central bank spokesman Osita Nwanisobi didn’t respond to messages seeking comment while calls to his mobile phone didn’t connect. An MTN spokesman said it’s still in talks with regulators and the banks to resolve the commission dispute.

    Legacy banks are losing their grip on the market for electronic payments, which rose by a half last year to ₦158-trillion

    Even so, legacy banks are losing their grip on the market for electronic payments, which rose by a half last year to ₦158-trillion. Bank apps accounted for just 43% of such transactions in 2020, while non-banks, led by MTN, had 35%, according to the Nigerian Interbank Settlement System.

    Regulators have also had to mediate a conflict between the banks and fintechs over pricing of USSD transactions — the type made over phones — fixing a flat fee of ₦6.98/transaction, with banks collecting the charges. Banks are pressing regulators to require fintechs to charge customers separately through end-user billing, a move they’ve resisted.

    Mobile banking

    “Ultimately, we are going to go with end-user billing,” Segun Agbaje, MD for Guaranty Trust Bank, the nation’s biggest lender, predicted an investor call last month. “You are going to see more of a migration from USSD to mobile banking because USSD will become an expensive channel.”

    With their core lending businesses stagnant and investment flooding into fintech start-ups, the need for banks to move is increasingly urgent. “Banking generally is shrinking rapidly that every traditional bank out there is thinking about how it can keep up,” said Idris, the consultant.

    Guaranty Trust CEO Segun Agbaje, 56, is in the final stage of obtaining regulatory approval for a fintech unit, which he plans to start in the second half. He is pushing to create a separate payments business with a mobile wallet in Nigeria and three African countries, including Ghana and Côte d’Ivoire.

    While banks have rolled out digital products mainly by partnering with technology firms, they want a separate licence to control the payment infrastructure.

    Access Bank is emphasising payments, “which is in line with our corporate strategic plan”, CEO Herbert Wigwe said on an investor call. “Payments and remittances are critical, and making sure you have full control over the infrastructure,“ Wigwe said.

    For its part, Flutterwave doesn’t see itself as a threat to legacy lenders. “Fintechs build bank-level features like loan, savings or investment apps off collaborations with banks,” CEO Olugbenga Agboola said. “We started Flutterwave because we realised that there were lots of efficient niche payment methods that we needed to connect into one reliable infrastructure.”  — Reported by Emele Onu, (c) 2021 Bloomberg LP



    Abubakar Idris Airtel Africa Flutterwave Guaranty Trust Bank Jumia Technologies MTN MTN Nigeria Precise Financial System Segun Agbaje Stears Business Tiger Global Management top Yele Okeremi
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleWho let the doge out? Dogecoin soars in meme-fuelled frenzy
    Next Article MTN cuts prepaid data prices – 20GB for R149

    Related Posts

    Jumia draws takeover interest from Axian Telecom

    2 July 2025

    MTN – the network for networks

    25 June 2025

    Listed: All the MVNOs in South Africa – 2025 edition

    19 June 2025
    Company News

    AI in project management: a new era of efficiency and transformation

    10 July 2025

    Samsung unfolds the future with thinnest, lightest Galaxy Z Fold yet

    9 July 2025

    Huawei supercharges South African SMEs with over 20 new eKit products

    9 July 2025
    Opinion

    In defence of equity alternatives for BEE

    30 June 2025

    E-commerce in ICT distribution: enabler or disruptor?

    30 June 2025

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.