Not too long ago we reported that the Central Bank of Nigeria was in the process of rolling out some regulatory frameworks and sandboxes for new players in the financial services industry. Well, that hasn’t happened yet.
However, the apex bank has just unveiled a new sandbox that invariably opens the financial system for telecom players. The new sandbox was first announced in a letter titled “Exposure Draft on Guidelines for Licensing And Regulation of Payment Service Bank”.
Dated October 5, 2018, the letter was addressed specifically to banks, telecom companies, mobile money operators and the NCC.
Great, i meant excellent thinking from CBN. pic.twitter.com/WBvlAyo9aF
— Adetayo oresanya (@particulartayo) October 8, 2018
In the letter, the CBN declared that it was in the process of establishing “Payment Service Banks”. According to the CBN, the proposed bank would play a key role in promoting financial inclusion and enhancing access to financial services for low income and the unbanked segments of the Nigerian population.
The CBN is expected to publish the full guidelines soon for debate and comments.
What would a Payment Service Bank Mean?
Now this news is pretty interesting. For one, it’s not clear what a Payment Service Bank is. And the CBN on its part is yet to publish any draft that provides more context. But the choice of telecom operators gives room to plenty of speculation.
According to some watchers, the proposed bank will open up the financial system for more disruption by telcos. With the “establishment of the Payment Service Bank, telcos and retail chains can now become Banks”, says Abolore Salami, founder of Riby, a Fintech startup. “Expect to see MTN Savings Account, MTN Money, Airtel Money, Shoprite Savings Account etc.”
And apparently, there’s plenty of good reasons why this outcome is desired.
— Quartz Africa (@qzafrica) October 7, 2018
Despite our large population and significant IT developments, access to financial services is still not widespread in Nigeria. And although Kenya, through M-Pesa, has shown the world new ways to reach the unbanked, Nigeria has been slow to catch on.
The new draft could see more cooperation between banks and telcos on this matter. With over 100 million active telecom subscribers, telcos are the most potent force in the push for financial inclusion.
It’s a long overdue regulatory measure. But we still await the final draft.
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