Afrigather Moniepoint, the Nigerian fintech unicorn, is working to safe a business banking license from Nigeria’s central financial institution, in keeping with three individuals conversant in the matter. Whereas regulatory approval may take as much as a yr, these discussions are a key milestone within the nine-year-old startup’s technique to develop its retail banking operations and improve its share of Nigeria’s monetary companies market.
A business banking license would allow Moniepoint to develop its product choices throughout Nigeria, together with worldwide transactions and treasury operations—each steady income drivers for banks. It could additionally permit the fintech to open bodily branches, constructing belief in Nigeria’s traditionally low-trust banking surroundings.
Overseas forex transactions may considerably enhance Moniepoint’s income, tapping right into a profitable market that earned seven of Nigeria’s greatest banks round ₦3.37 trillion within the final 9 months.
The license would additionally give it a significant edge over rivals like OPay and make it the primary Nigerian fintech to personal a business banking license. Nubank, the biggest fintech in Latin America, is making use of an identical technique in Mexico, the place it utilized for a banking license after turning into the first financial institution for almost 60% of its Brazilian prospects and serving greater than half of the grownup inhabitants.
Pursuing a business banking license underscores Moniepoint’s objective to distribute monetary companies extra effectively than its rivals. Regardless of being a late entrant, the fintech has already turn into a key participant within the company banking sector by leveraging expertise and an enormous community of brokers.
Moniepoint declined to remark.
If granted a business banking license, it is going to once more be a late entrant. With 24 business banks, Moniepoint will hope its momentum in retail banking, launched in August 2023 will assist it stand out. Whereas its actual variety of prospects is unclear, trade consultants declare it’s second solely to OPay and forward of Kuda, which has 7 million customers. This speedy progress locations Moniepoint’s buyer base forward of comparatively new business banks like Globus Financial institution, which had 60,000 prospects in 2022.
There’s vital potential for disruption out there, as Nigeria’s largest banks are sometimes criticized for serving thousands and thousands of consumers with subpar companies. A fintech-driven business financial institution may shake up the sector. If profitable in buying the license, Moniepoint will be part of different main business banks like FirstBank and Zenith, which have huge networks of banking brokers.
The fintech started getting ready for the license within the first quarter of 2024, shortly after hiring Bayo Olujobi as its new Chief Monetary Officer (CFO) from Stanbic IBTC, one individual conversant in the discussions mentioned. Buying the license may take a yr, because the central financial institution’s prolonged vetting course of should be accomplished earlier than granting approval to start banking operations. Moniepoint has considerably bolstered its compliance group, hiring greater than a dozen new workers in compliance and fraud monitoring for the reason that starting of the yr.
At $30 million, the capital required for the most affordable business financial institution license, a regional license, is a fraction of Moniepoint’s current $110 million increase, which elevated it to unicorn standing. Moreover the fee, the fintech may even must arrange bodily branches throughout Nigeria with regulatory necessities like a powerful room, loading bay, and banking corridor.
Whereas business banks function below stringent rules, buying a license would sign Moniepoint’s maturity and its readiness to embrace a extra established regulatory framework. This might be an vital step, particularly because the central financial institution has adopted a extra stringent regulatory stance towards fintechs since December 2023, which has created challenges for a lot of startups.
A business financial institution license would permit Moniepoint to beat the restrictions of its microfinance financial institution license, which limits each product choices and geographic enlargement past Nigeria’s South-West area—a major barrier in a rustic with such a big and various market.
The fintech has labored round its geographical limits by opening “assist workplaces” nationwide to take care of a bodily presence in areas the place it can not function branches. Nonetheless, there isn’t a workaround for its product limitations.
Nigerian microfinance banks can not supply complicated monetary companies equivalent to large-scale company banking, funding banking, overseas forex transactions, or intensive treasury operations which can be usually worthwhile segments for business banks. A business banking license removes these limitations for Moniepoint and permits the fintech to generate a number of earnings sources past microloans and financial savings accounts.
In 2023, Entry Financial institution, Nigeria’s largest financial institution, generated solely 29.4% of its complete revenue from retail banking, with most earnings coming from business and company banking. Equally, most banks rely closely on company deposits. United Financial institution for Africa, a tier-1 financial institution valued at ₦1.06 trillion, reported ₦8.2 trillion in retail deposits in comparison with ₦23 trillion from company purchasers.
The fintech has additionally gone on a compliance hiring spree, hiring greater than a dozen compliance and fraud monitoring workers for the reason that begin of the yr in response to the central financial institution’s ban on fintechs in April.
Though a business banking license comes with greater regulatory requirements and capital necessities, the long-term benefits—equivalent to diversified companies, elevated credibility, and expanded progress potential—make it an interesting transfer for Moniepoint.
Editors word: An earlier model of this text misstated that Nubank has a banking license in Brazil. Now we have up to date the article to replicate the correct info.
