After years of enjoying little to no competition, banks in Nigeria have reached out to the country’s regulators for help in dealing with encroaching FinTech firms, Bloomberg reported Tuesday (April 20).
Nigerian banks are protected by regulators from foreign competition, and control 94 percent of the country’s market in terms of assets. But now they face is competition from within the country, as FinTech firms have emerged amid the pandemic-fueled digital shift.
The conflict went public this month when lenders barred MTN group, Africa’s leading mobile phone company, from their shared platform in protest of a nearly 50 percent cut by MTN on commissions charged on banking channels, Bloomberg reported.
As PYMNTS noted last month, the dispute left many consumers unable to purchase credit for their phones. MTN has around 79 million subscribers in a country where people prefer to use banking mediums to buy call credits.
MTN ultimately agreed to restore the commission it paid lenders, thanks to an intervention from the central bank and minister of communication and the digital economy.
The conflict means that 60 million Nigerians — Africa’s largest economy — who lack access to banking services risk missing the benefits of the FinTech boom that has put huge swaths of the continent at the forefront of a mobile money revolution.
“Anticipating the underserved entering the market, foreign investors have jumped in,” the news outlet notes. Flutterwave, which is based in Lagos and San Francisco, notched $170 million in funding this year. That made it the second Nigerian FinTech startup with a valuation over $1 billion.
Flutterwave’s investment is more than double what Nigeria’s biggest banks spent on IT last year, which is why, Bloomberg says, these lenders could use some regulatory assistance. The country’s largest lenders are planning to launch payments units this year, something countries like South Africa and Kenya did more than 10 years ago.
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