MTN Group, Africa’s largest telecom operator by subscriber base and geographical reach, is set to launch a digital bank, according to local press reports.
MTN, with over 290 million subscribers across 19 markets, already has a fintech arm which runs its MoMo (mobile money) platforms. The plans to launch its very own bank will help it grow its fintech arms faster and develop more banking and telco products for the new generation of users without the need of third-party banks.
MTN MoMo recorded over 73 million active users in Q3 2023, and the new bank will help it offer payments, loans, savings, investments, and insurance, like Kenya’s M-PESA, a Vodacom subsidiary.
According to reports, MTN is set to acquire its banking licence from the South African Reserve Bank (SARB) which is set to open up its national payments system to non-banking entities and fintechs. MTN Group falls in both fintech category through its fintech arm and as a non-banking entity through its mobile network services.
It’s entry into banking will be felt across the continent as MTN has the largest network sites and operations across Africa. It’s MoMo has been serving customers with affordable financial solutions over the phone and over the counter.
Early this year, Mastercard announced it had acquired a minority stake of $200 million in MTN Group’s fintech business at a valuation of $5.2 billion on a cash and debt-free basis.
The MTN Group Fintech business includes mobile money platform MoMo, insurance offerings, airtime lending and e-commerce, as well as its network services. In August 2023, MTN Group announced it was looking to sell about a 30% stake in its fintech business. MTN Group’s fintech business delivered on its rapid expansion plans with growth in volume of transactions increased by 37% to 8.3 billion in the first half of the year from its 61 million active MoMo customers.
The launch of a bank will bank on such partnerships to fuel its growth across Africa and serve the millions of unbanked and under-banked population on the continent. According to the World Bank, more than 80 million unbanked adults in Sub-Saharan Africa receive payments for agricultural goods in cash. Digitalizing those payments could motivate a share of unbanked adults to adopt formal accounts, leading to an increase in financial inclusion.
MTN’s Bank therefore still has a huge population to serve in its various markets across Africa. In 2022, MTN launched its MTN MoMo Payment Service Bank, which recently introduced its new outbound and inbound remittance service, allowing customers in Nigeria to transfer money to 13 different African nations such as Benin, Cameroon, Congo Brazzaville, Côte d’Ivoire, The Democratic Republic of Congo (DRC), The Gambia, Liberia, Malawi, Rwanda, Sierra Leone, Togo, Uganda, and Zambia.
The service also allows Nigerian users to receive money from six African countries including South Africa, Rwanda, Uganda, Zambia, DRC, and Mauritius.
According to the telco, MoMo PSB users can send and receive funds instantly, with the transaction amount automatically converted to the recipient’s local currency, and a 3% transaction fee will apply. The firm added that the fintech PSB is positioned to enable millions of unbanked and underserved Nigerians to access a wide range of financial service products with an expansive agent network of over 166,000 agents and digitized partnership infrastructure.
The launch of a bank will propel MTN Group’s services to its customers across Africa to add to what it has been already doing.
In February this year, MTN’s Mobile Money Platform, MoMo, and banking tech firm JUMO partnered to launch short-term loans in South Africa dubbed Qwikloan.
Quickloan enables MoMo users to obtain small, short-term loans on their mobile phones, ranging from R250 to R10,000 depending on eligibility, through a seamless application process available via the MTN MoMo App or USSD (*151#).
Unlike traditional banking institutions with a 24% interest rate on short-term loans, Qwikloan is able to reduce the cost of lending to a customer to as low as 10%. This is made possible by MTN MoMo’s payment infrastructure and JUMO’s core banking infrastructure with AI prediction capabilities.
