New Telegraph

Report: Telecos’ presence in digital banking threatens African banks

Banks in Africa are threatened by the entry of telecommunication companies into banking services as their market share in that space could shrink, the African Digital Transformation Report 2022 has revealed. Digitisation has transformed banking, with more African banks increasing their digital services, but the rise in competition by mobile companies has disrupted the market, supported by growth in internet penetration and access to mobile phones.

The continent’s largest mobile operator, MTN, has made significant inroads in the financial services, and is in the process of setting up a bank in its biggest market, Nigeria. The firm was recently granted a licence to establish Mobile Money Payment Service Bank in Nigeria, where its mobile money service is reaping great financial rewards for the company. MTN has been aggressively growing money services in several African countries and the offering boasts over 57 million mobile money users, according to latest opera-tor’s latest financial report. The report noted that the entry of telcos into banking services as one of the threats to African banks.

More than 100 banks participated in the survey aimed at establishing how the banks perceive and promote digital transformation. It stated that telecom companies entering the industry to provide financial services were considered a “significantly bigger threat to banks’ market share than the rise of fintechs and challenger bank.

“Telecoms companies have sought to take advantage of their huge customer bases to move into financial services in order to compensate for a falling share of the voice phone service market in the face of competition from messaging apps.” In Nigeria alone, MTN Nigeria’s mobile money service has attracted 9.4 million active users since launching in August 2019, the company revealed in January.

The volume of transactions performed through the service rose by 167 per cent to 137.5 million in the 2021 full financial year. Apart from airtime purchase services, mobile money allows users to make money transfer, payments and cash withdrawal from authorised agents Vodacom, which has a presence in a Tanzania, the Democratic Republic of the Congo, Mozambique, Lesotho, and Kenya, operates a similar money service known as M-Pesa.

Read Previous

Bellview Crash: 17 years after, memorial arcade turns national embarrassment

Read Next

Agents decry double taxation as 3,650 used vehicles arrive

Leave a Reply

Your email address will not be published. Required fields are marked *