As the emergence of mobile money services in the Nigerian financial sector continues to generate speculations about whether or not it poses a significant threat to the banking industry, the CEO of United Bank for Africa (UBA), Kennedy Uzoka, sees it differently.

According to the CEO, banks will always be most preferred for monetary transaction due to the level of security in Nigeria. This is despite some people’s belief that mobile money services could reduce the value of banks in financial transactions and savings.

Uzoka, who recently said all these while speaking to Nairametrics on the sideline of the UBA annual general meeting in Lagos, also revealed that the success of mobile money in Kenya which resulted in the closure of some Kenyan banks, was telecom-driven. That is not the case in Nigeria, he said.

Telecoms are looking to take the driver’s seat

The mobile money service was recently expanded by the Central Bank of Nigeria and the Nigerian Communications Commission (NCC) to include telecommunication companies, with MTN Nigeria and Airtel Nigeria already expressing interest in the market. This decision was made to achieve CBN‘s financial inclusion goal.

Why the banking industry should be worried

Initially, telecommunications Companies only served as infrastructure providers. As such, it posed no threat because they were excluded from the mobile money business. But with the PSB-licence, telecoms firms can utilise their over 100 million subscribers to kickstart their new service.

Note that mobile money transaction occurs with the use of Unstructured Supplementary Service Data (USSD) platform on mobile networks. Considering that telecoms firms have about 146 million active mobile phone lines and over 100 million mobile internet subscribers among themselves, there’s every reason for banks to be worried.

The Success of M-Pesa in Kenya is a motivating factor. M-Pesa was launched by Vodafone for Safaricom and Vodacom (all of whom are Telecommunications Companies). Now, there are about 93 percent of Kenyans who have access to mobile payments. M-Pesa now records more accounts than banks, leading to the closure of ATMs and some banks in Kenya.

Almost all the telecoms companies in Nigeria have made their interest to operate mobile money service known. They have the numbers that put them at an advantage and make the market theirs, rendering banks to the level of a..... https://nairametrics.com/2019/04/26/mobile-money-service-ubas-kennedy-uzoka-unfrightened-of-telcos-threat-but-theres-need-to-be/