Nigeria with only 18 million Bank accounts and 62 million Mobile Phone subscribers is posed to be Africa’s biggest market for Mobile Money in coming months. Despite the late start of Mobile Money in Nigeria, the strong compelling needs of the millions of unbanked populations will propel it to enviable heights that will surpass Kenya’s seemingly achievements with 6.5m subscribers with MPESA in coming years.
With four world class Mobile operators, 25 large commercial Banks and 840 micro Finance Banks and an addressable market of 140 million people and newly released guidelines for Mobile money by the National finance regulator, The Central Bank of Nigeria, the stage is set for Africa’s most populous Nation to commence Mobile money roll outs.
The mobile operators are positioning themselves for a significant share of the market. MTN Mobile money platform will go live in coming weeks while the likes of Zain are working towards a launch too. It is not too clear yet the plans of operators like Glo and Etisalat in the evolving mobile money ecosystem in Nigeria. From the Banking sector, UBA Group and Zenith are looking like top contenders. Zenith Bank recently conducted public demonstrations of Mobile money transfers with technology provider, Tagattitude Nigeria at the Card expo event in Lagos.
Despite all the technology and marketing budget that will be thrown into these ventures by the Banks and mobile operators, agent networks will play a significant role in the success of these enterprises. While the operators which are known for low value and high volume transactions with very useful experiences in managing transactions through agent networks for pre paid cards distributions, same cannot be said of Banks with little or no experiences in Banking through agents. Banking through agents is a novel in Nigeria.
Agent Banking is popular in Peru, Brazil, Kenya and Phillipines. In Agent Banking, it is basically a technology play for Banks. They provide the technology that enable Banks and their customers to interact remotely in a trusted way through existing local retail outlets. Without the likes of large retails store chains like shoprite, Dunns or UK’s telcos,the players will have to make do with what is available, the eateries and gas stations. Mr Biggs is a very prominent eatery with over 907 outlets in major urban and semi urban towns across the length and breath of Nigeria while the gas stations are present in cities, towns and rural areas.
These outlets will perform cash in / cash out points for Mobile money, serve the customers, may enroll customers and implement simple KYC while the Banks manage the technology platforms. The advantage of using these channels are,cash are available in the merchants kitty from shop sales,the cost of setting up brick and mortar Branches are significantly reduced, agent provides the space, energy and trained manpower to provide services to customers.
Set up time is also significantly reduced. An agent can be set up and running in 5 hours while it will take average of five to six months to commission a Bank Branch.
Experiences has shown that agent Banking can help Banks decongest Brick and mortar Branches, expand into new commercially unviable territories, create a virtual Bank and tapping into new customer segments that were previously left behind.
Though it is not all sweet honey pot banking through agents. Risk such as security, ID manipulations and Point of transactions frauds are issues that the Banks will have to tackle through such third party relationships. With adequate risk management, robust technology platform and proper training and monitoring systems, Nigerian Banks may be on their way to joining the likes of Lemon Bank in Brazil without a single Bank Branch while working through over 5,000 bank agents. Welcome to the future!