Nigerian fintech unicorn Moniepoint is working to secure a commercial banking license from the Central Bank of Nigeria, according to three people familiar with the matter. Regulatory approval could take up to a year, but the meeting marks a key milestone in the nine-year-old startup’s strategy to expand its retail banking business and gain a bigger share of the Nigerian financial services market.
The commercial banking license would allow Moniepoint to expand its product offerings across Nigeria, including international trading and treasury operations, which are a steady source of revenue for banks. The fintech could also open physical branches and build confidence in Nigeria’s historically low-trust banking environment.
Foreign exchange trading could significantly boost Moniepoint’s revenue, tapping into a lucrative market that has earned Nigeria’s seven largest banks about 3.37 trillion naira in profits over the past nine months.
The license gives Moniepoint a significant lead over rivals such as OPay, making it the first Nigerian fintech with a commercial banking license. Nubank, the largest fintech in Latin America, is pursuing a similar strategy in Mexico, where it applied for a banking license after becoming the primary bank for about 60% of Brazilian customers and serving more than half of the adult population.
Seeking a commercial banking license underscores Moniepoint’s goal to deliver financial services more efficiently than its competitors. Although the fintech was a late entrant, its use of technology and a vast network of agents has already made it a major player in the agent banking sector.
Moniepoint declined to comment.
A new kid on the banking block
If Moniepoint gets a commercial banking license, it will again be a late entrant. With 24 commercial banks, Moniepoint is hoping to see a noticeable boost in retail banking when it launches in August 2023. While the exact number of customers is unclear, industry experts claim that with 7 million users, it is second only to OPay and ahead of Kuda. This rapid growth puts Moniepoint’s customer base above relatively new commercial banks such as Globus Bank, which had 60,000 customers in 2022.
Nigeria’s largest banks are often criticized for providing substandard service to millions of customers, which could cause major disruption to the market. A fintech-led commercial bank could be a game changer for the sector. If successful in obtaining a license, Moniepoint would join other large commercial banks such as FirstBank and Zenith, which have vast networks of banking agents.
The fintech began preparing for its license in the first quarter of 2024, shortly after it hired Bayo Olujobi as its new chief financial officer, a person familiar with the discussions said. Obtaining a license could take a year, as the bank must complete the central bank’s lengthy screening process before it is approved to start banking operations. Moniepoint has significantly strengthened its compliance team, hiring more than 10 new employees since the start of the year to focus on compliance and fraud monitoring.
