As per a regulatory filing, MTN Nigeria has revealed that it has received final approval from Nigerian regulators to run a payment service bank (PSB).
As can be seen in the filing, the bank had already received notification of the approval in principle from the Central Bank of Nigeria (CBN) in November 2021, and the confirmation message dated April 11, 2022 was almost a formality.
The telco has been putting in place plans to scale in the mobile money market since launching its mobile money product, MTN MoMo, in 2019.
In January 2022, MTN revealed that MTN Nigeria’s mobile money service (MoMo) had attracted 9.4 million active users since launching in August 2019, a growth the company said provided a ‘solid foundation’ for the upcoming establishment of the bank.
According to MTN, it will be conveying the commencement date for its payment service bank to the Central Bank of Nigeria as it targets the large portion of Nigerians who are not included in the current financial system.
According to the Business Insider, there are more than 60 million Nigerians who are estimated to be financially excluded.
The upcoming bank is expected to grow mobile money usage in the populous country as can be seen from the reactions of some of the leading innovators in tech in Nigeria and Africa:
Jason Njoku, founder of video on demand service, IrokoTV, pointed out how moble money is commonplace in several countries and not so much in Nigeria where there is so much potential with its humongous population. This sentiment was backed by Cameroonian entrepreneur, Rebecca Enonchong, who chimed in that Nigeria was finally getting mobile money.
Ugandan Fintech entrepreneur, Stone Atwine, founder of Eversend App, also expressed the ramification that could emerge from MTN scaling mobile money services in Nigeria.
Nigeria’s mobile money landscape has been stagnant because CBN does not give mobile banking licenses to non -financial companies like telcos, limiting the scale of their offerings.
However, in 2018, the Central Bank gave the first indication that it would allow non-financial companies to apply for mobile banking licenses, either as Payment Service Banks (PSBs) or Mobile Money Operators (MMOs).
Under the guidelines, mobile network operators are allowed to provide financial services to millions of unbanked Nigerians. However, they can do so only as PSBs and through a subsidiary separate from their core operations.
Thus, MTN will be providing PSB services via MoMo.
While they’re similar to typical banks, the scope of PSB license is strictly to deepen financial inclusion among Nigeria’s large unbanked population and the regulator forbids them from engaging in credit risk and foreign exchange operations.