Glo Launches Payment Service Bank: Implications for Nigerian Banking

Nigerian telecoms operator, Globacom, founded by billionaire Mike Adenuga, recently launched its own payment service bank (PSB), MoneyMaster PSB. The business operates payment banking services in the country alongside rivals 9Mobile, MTN, and Airtel.

The Central Bank of Nigeria is making attempt to promote financial inclusion in Nigeria, where a sizable segment of the population is still unbanked, including the creation of the payment service bank.

The Nigerian Inter-Bank Settlement System (NIBSS) reported that as of December 2021, there were around 133.5 million bank accounts in Nigeria.

Only 54 million of the accounts had a Bank Verification Number (BVN) as of April 10, 2022. The 79 million underbanked and unbanked people are the target of telecom PSB units.

Let’s look at five benefits of Glo payment service bank, MoneyMaster PSB. 

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1. Driving financial inclusion 

Globacom plans to enter the financial services market by launching a sizable agent network of more than 100,000 agents throughout the country’s rural and metropolitan areas.

In order to promote financial inclusion, the corporation also plans to place thousands of kiosks across the nation.

PSB will significantly increase the number of people who are financially included hence phone numbers will be used in place of account numbers.

The total number of active bank accounts in Nigeria as of December 2018 was 71.2 million, compared to 172 million active mobile lines during the same time period.

Since the introduction of minimal Know Your Customer (KYC) accounts, this will aid in enabling financial inclusion in Nigeria.

MoneyMaster PSB will also offer a lot of the services provided by commercial banks, such as payments and remittances, deposit collecting, and the issue of debit and prepaid cards.

But unlike commercial banks, they won’t be able to lend money or deal in foreign currencies.

2. Digital revolution in Nigerian Banking

ICT contributed an astounding 17.92% of Nigeria’s GDP in 2021. With the rise of PSB digital revolution in Nigeria, banking will increase more. 

This is particularly true for channels that use USSD (Unstructured Supplementary Service Data). You can use this code on your mobile device to send and receive text messages similar to conventional SMS (for example, *919#).

When the market vendor on the corner or your hairstylist has a PSB account, you can simply transfer to by dialling a simple USSD number, you won’t need to carry cash.

When it’s so simple to transfer to their PSB accounts, there will be no need to take the chance of carrying cash to pay your day workers at a building site.

Given that USSD may be used as a channel without a smartphone or data, its adoption and use for banking will likely increase significantly in the next years.

3. Job creation 

PSBs will need to rely largely on the agency banking model to cut operational costs and maintain profitability since they must have at least 50% physical access in rural areas.

Agents will have more employment options thanks to the agency model, particularly in rural areas where the agency network is currently underrepresented.

As an illustration, M-Pesa had 120,000 agents in 2017 and MoneyMaster plans to launch with 100,000 agents. 

Given that Nigeria is a larger country with a larger population, this will undoubtedly be increased in due time. 

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