Local reports say MTN Group, Africa’s largest telecommunications operator by subscriber base and geographic reach, plans to launch a digital bank. MTN has more than 290 million subscribers in 19 markets and already has a fintech division that operates the MoMo (mobile money) platform. The plan to set up its bank will help the company expand its fintech division more quickly and develop more banking and communications products for a new generation of users without the need for third-party banks.
MTN MoMo recorded more than 73 million active users in the third quarter of 2023, and the new bank will help the company offer payments, loans, savings, investments and insurance, similar to Vodacom subsidiary M-PESA in Kenya.
MTN is reportedly close to receiving a banking license from the South African Reserve Bank (SARB), which it plans to use to open up the country’s payments system to non-banks and fintechs. MTN Group falls into the fintech category for both its fintech division and its mobile services as a non-banking company.
MTN has the largest network footprint and branches in Africa, so its entry into banking will be felt across the continent. Its company, MoMo, offers affordable financial solutions to customers over the phone and over the counter. Earlier this year, Mastercard announced it would acquire a minority stake of $200 million in MTN Group’s fintech business at a valuation of $5.2 billion on a cash-free, debt-free basis.
MTN Group’s fintech businesses include mobile money platform MoMo, insurance products, airtime loans, e-commerce, and network services. In August 2023, MTN Group announced it was considering selling approximately 30% of its fintech business. MTN Group’s fintech business has executed a rapid expansion plan, with transaction volumes growing 37% in the first half of this year from 61 million active MoMo customers to 8.3 billion.
The creation of the bank will rely on such partnerships to drive growth across Africa and serve millions of people on the continent who are unbanked or underbanked. According to the World Bank, more than 80 million unbanked adults in sub-Saharan Africa receive cash payments for agricultural produce. Digitizing these payments could encourage some unbanked adults to open formal accounts, leading to greater financial inclusion.
Read More: MTN Nigeria to Obtain two New Licenses for Momo PSB
Therefore, MTN’s banking still needs to serve a huge number of people in different markets across Africa. In 2022, MTN launched its MTN MoMo payment services bank and recently launched a new remittance service that allows Nigerian customers to send money to 13 African countries, including Benin, Cameroon, Republic of Congo, Côte d’Ivoire, Democratic Republic of Congo, Gambia, Liberia, Malawi, Rwanda, Sierra Leone, Togo, Uganda and Zambia.
The service will also enable Nigerian users to receive remittances from six African countries, including South Africa, Rwanda, Uganda, Zambia, Democratic Republic of Congo and Mauritius.
