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Telcos, OTT conspiring to kill banks


Digital banking services are here in Nigeria and it is only a matter of time before the traditional banking institutions are swept away. That is if they refuse to innovate.

Today, more than half of consumers in major cities across the county own a debit card, and a growing proportion are using online portals to pay bills and make purchases, though security concerns remain.

Bank customers are banking on the proliferation of the mobile phones and the near ubiquity of data.


Telecommunications companies are also coming for pieces of banking pie. Some of them are investing on how to adapt to the growing trend of offering Mobile Money Services to their customer base and the evolution of these services over time.

Telcos globally face issues around disruption from OTT players, declining revenues and heavy competition from other telcos; this in turn makes them look at services that can add value to their customer base and grow revenue.

Mobile Money services does just that: this spans across not only payments but also new age money services such as investments, insurance and some telcos are even becoming digital banks.

Apart from Telcos, Whatsapp- that can be described as OTT player is introducing payments to its messaging app, enabling users transfer money to one another with a text.

With the new service, users can now link their bank account to their WhatsApp account via Unified Payments Interface (UPI) and begin making payments straight to another user’s bank account through a WhatsApp chat.

According to Ndubisi Ekewe, who is familiar with the development, banks have everything to worry about the risks to banks are clear.

“The telcos have hated the global messaging app; now the banks join the fray. The risk to banks is clear: if WhatsApp becomes very successful in payments, it may become a small bank of itself. In other words, if people decide to be leaving money in their wallets without moving them to their bank accounts, most banks would struggle [liquidity issues]” Ekewe added.

But the banks are responding- Wema Bank is hoping to improve access to digital banking technology to local consumers.

It recently debuted the country’s first completely digital account creation process via its online subsidiary, ALAT.

Its tech-centric offering has already attracted 175,000 customers, and the bank is hoping that online account creation will bring more connectivity-coveting Nigerians to its customer base.

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Digital BankingOTTTelcos
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