(Ecofin Agency) - The market targeted by the subsidiary has growth potential. However, it is complex and competition is tough.
MTN Nigeria announced Thursday (May 19), the commercial launch of MoMo PSB Limited, its fintech subsidiary. The commercial launch follows the successful completion of a test phase that began on May 16, 2022, in commemoration of the launch of MTN’s GSM operations in 2001 and its listing on the Nigerian stock exchange in 2019.
The fintech subsidiary was approved by the central bank of Nigeria in April 2022. At the time, the operator did not provide many details on the missions of that subsidiary. But, during an investor conference, Karl Toriola, MTN Nigeria’s CEO, provided some details.
First, he explained that it is unlikely that the new subsidiary would have an impact on MTN Nigeria’s consolidated result this year as it is launching activities almost in the second half of the year. Secondly, he informed that for the time being, MoMo PSB would allow users to carry out e-wallet (send and receive funds)-related and savings activities.
The Central Bank license allows MTN to invest up to 25% of the funds saved in MoMo PSB wallets in public securities. So, the operator will surely pay interest on savings. The group explains that for floating mobile money balances, it will decide later whether it will pay interests or non-financial rewards.
According to recent estimates, 70 million people have a bank account in Nigeria. The savings market is thus a growth niche for fintech startups. However, several obstacles can prevent operators from entering the sector. For instance, in the sector, operators are obliged to carry out KYC (know your customers) processes. Failure to do so leads to severe penalties. There is also the need to attract meaningful clients that have the potential to save funds in their mobile money wallets. Operators will also have to deal with competition from other operators and small payment firms that can have easy access to the clients targeted.
Let’s note that MTN Nigeria’s MoMo PSB was launched the same day as Airtel’s.