WHAT MTN BANKING LICENSE MEANS?

Just at the start of this week, the CEO of MTN group disclosed in South Africa the plan of MTN to acquire a banking license in 2019. MTN currently has a subscriber base of 64 million according to NCC September 2018. The company has faced several sanctions from the Nigeria government. It has also decided not to come public with its listing in NSE in recent times. NCC has given MTN till may 2019 to come public with its IPO. However, analysts project that MTN might not come public until after the 2019 general election in Nigeria as the election has a possible 15-20% plunge.

As at December 2017, CBN director Banking and Payment system - Dipo Fatokun - disclosed that the BVN project has captured approximately 44 million accounts linked with 31 million registered users. This figure invariably tells us that no FINTECH has an exposure to more than 31 million prospective users in Nigeria. Meanwhile, over 50 million Nigerians are said to be unbanked.

People, most especially parents, buy recharge cards and send to their wards. The child will thereafter sell this card to turn it into money, often at a lower or discounted value. This is a typical scenario for unbanked people and during emergency situations. With MTN Banking license, it means the recharge cards can easily be turned to money as a means of exchange without finding buyers. We could afford to make payments directly from our sim Cards. Instead of going through a bank USSD Code or app to make payments for bills, it means one can pay through MTN directly.

MTN could also offer lending and saving capabilities just like Piggybank and PayLater. It will also make it easier for people to get small loans at any time of the day. The bean cake (àkàrà) seller can get a loan of say #3000 and easily payback. The possibilities with MTN emergence into the banking space is limitless.

As MTN is to Safaricom so also is MTN mobile money to M-PESA. Several startups have tried to replicate the M-Pesa east africa mobile Payment in other countries including Nigeria and have failed largely. M-Pesa itself couldn't work out in other countries. 80% of mobile money transactions in Kenya is through M-PESA. MTN could be on the rise to replicate this model with a more comparative advantage of data and large user base as compared to other fintech solutions in Nigeria. This will drive financial inclusion that the CBN has targeted to reach 80% by 2020 through the new banking licenses. MTN has all it takes to scale and also be a winner in the mobile money market. MTN has the funds and doesn't need to look and pitch for any investor. MTN also has enough data customers to capitalize on. MTN Ghana has tested this model and it was a success. In 2006, MTN has a customer base of 2. 5 million in Ghana and over a decade this number grew to 12 million. As of December 2017, there are 6.2million mobile money subscribers in Ghana, almost 50% of the total subscriber base.

MTN will definitely get a good share of the bite to chew in the fintech and banking space. However, I do not see the new development as a disruption, though it will challenge the banks and other telcos. However, the space is wide and everybody has his role to play. In terms of the revenue it will pump in for MTN, it is going to be huge and it's going to increase their total subscribers in an exponential rate. Meanwhile, in another news, Opay, the payment platform for Opera - the most downloaded app in Africa - has launched its service in Kenya and is set to Kickstart mobile Payment in other parts of Africa. Opay also currently supports other payment platforms like M-Pesa, Airtel Money, Mastercard, Visa among others.

With MTN set to launch the mobile money by the first quarter of 2019, how are commercial banks and other Telecommunications companies (Airtel, Glo and Etisalat) going to respond?. Will the other telcos also acquire a banking license. Time will definitely tell.