When MoMo PSB, MTN Nigeria’s fintech arm, misplaced 2.5 million lively wallets in 2024— two years after its launch—CEO Karl Toriola claimed throughout an buyers’ name the decline was a part of a strategic shift to reinforce service penetration, increase monetization, and decrease buyer acquisition prices.
Initially, the entry of MTN and Airtel Africa into Nigeria’s cost service sector in 2022 was anticipated to disrupt conventional banks and fintech corporations. With MTN’s cellular cash operations spanning 24 African nations and over 200 million wallets and Airtel Cash serving 38 million customers throughout 14 markets, each telecom giants had been seen as formidable opponents. Nonetheless, their affect has been extra nuanced than anticipated.
MoMo PSB is one in every of 5 Cost Service Banks (PSBs)-four telecom operators and one fintech – licensed by the Central Financial institution of Nigeria (CBN) between 2021 and 2022 to drive monetary inclusion, notably in rural and underserved areas. Alongside 9mobile’s 9PSB, Airtel’s Smartcard PSB, Unified Cost’s Hope PSB, and Globacom’s Cash Grasp PSB, it was established to offer banking providers to people and companies past the attain of conventional banks. Nonetheless, the PSB licence doesn’t enable them to supply loans, foreign exchange providers, or make investments past government-approved securities, limiting their income potential.
PSBs have struggled to realize the identical market traction as fintech giants like Opay, Moniepoint, and Palmpay, which have onboarded hundreds of thousands of customers.
In Nigeria, cellular cash adoption is primarily pushed by banking brokers attributable to poor web connectivity and low smartphone penetration. Many individuals in rural areas lack smartphones or steady web entry, making digital banking providers inaccessible. Therefore, banking brokers have turn into probably the most dependable strategy to attain unbanked rural dwellers.
Regardless of constructing an agent community, MoMo PSB has primarily relied on MTN Nigeria’s infrastructure to supply cash transfers, financial savings, insurance coverage, and cost options. The corporate has additionally acquired important monetary backing from its guardian firm to strengthen its place by constructing its digital banking infrastructure.
By the top of 2022, MTN Nigeria had invested ₦16.4 billion to ascertain and scale MoMo PSB’s operations. In 2024, it injected an extra ₦9.4 billion after buying the remaining 7.17% stake from Acxani Capital, making MoMo PSB a totally owned subsidiary. This funding initially yielded sturdy progress.
MoMo PSB’s lively cellular cash wallets surged from 2 million in December 2022 to five.3 million by the top of 2023. This progress was pushed by an growth of its agent community, which grew from 103,000 to 327,000 inside the similar interval. In March 2023, the corporate additionally launched a service provider ecosystem, which rapidly scaled to 324,000 retailers by year-end.
In 2024, MoMo’s fortunes modified. The variety of lively wallets fell to 2.8 million, and money deposits from pockets customers dropped by half, from ₦7.6 billion to ₦3.8 billion. The agent and service provider networks additionally noticed important declines, shrinking by 76.8% to 75,168 retailers and 79.2% to 68,016 brokers, respectively. Whereas this recommended a shift from agent banking as the corporate deployed investments primarily in digital banking, some business consultants considered it as an indication of a broader development.
“Lots of cost service banks are specializing in cities and competing for present financial institution prospects, relatively than concentrating on the agricultural communities they had been designed to serve as a result of the price of banking the unbanked is excessive,” a fintech government informed TechCabal anonymously.
Regardless of these setbacks, transaction quantity elevated by 4.3% in 2024, which CEO Karl Toriola interprets as an indication that MoMo PSB now has a higher-quality pockets base and that underlying demand stays sturdy.
In keeping with Victor Asemota, Development Companion, AnD Ventures, MoMo PSB is intentionally lowering its reliance on brokers and retailers, lots of whom have interaction in transactions solely for commissions. He additionally suggests {that a} fraud incident could have triggered an entire overhaul of the corporate’s technique.
In Could 2022, MoMo PSB skilled a major safety breach ensuing within the lack of roughly ₦22.3 billion ($53 million).
“They’re additionally forcing a change within the sort and high quality of shoppers,” Asemota informed TechCabal.
MoMo PSB is actively increasing its service choices. The corporate has utilized for Cost Service Options Supplier (PSSP) and Cost Terminal Service Supplier (PTSP) licenses. These would enable it to deal with cost gateways, present service provider aggregation providers, and handle point-of-sale (PoS) terminals
This diversification technique goals to scale back reliance on brokers whereas higher serving small and medium-sized enterprises (SMEs) and particular person prospects.
Trying ahead, Toriola mentioned the corporate will concentrate on consumer engagement and retention in a bid to reverse the decline in pockets utilization and enhance exercise within the ecosystem earlier than the top of the 12 months.
