OPay presently controls Nigeria’s largest agency banking network according to a report on the Nigerian Financial Services Market by Intelpoint. The fintech controls 563,262 POS agents out of a total of 1.5 million agents in the country.
Another agency banking giant, MoniePoint boasts the second-largest network with 303,946 POS agents scattered across the country. Together, both companies control 867,208 agents, representing 57.8 per cent of POS agents in the country.
In the geographical breakdown, Lagos alone has 322,266 out of the 1.5 million agents. This represents 21.4% of all POS agents in the country, leaving the other 35 states and the Federal Capital Territory, Abuja to share the remainder.
This is quite unusual, given that agency banking was designed by the Central Bank of Nigeria (CBN) to ensure financial inclusion for unbanked and underbanked population. These are supposed to be people living in places with lesser concentrations of banks. But Lagos is the country’s main economic hub. However, due to the shortcomings of traditional banks, a gap was automatically created for the fintechs to fill with agency banking.
As per findings in the report, a significant portion of Nigerians, 50.3%, utilize a banking agent, be it a mobile money or POS agent, for receiving funds. Additionally, 44.4% of Nigerians rely on these agents to send money, while 2.9% utilize their services to pay bills.
Also, 2.5% of respondents reported using banking agents to conveniently purchase airtime. These statistics highlight the widespread usage and versatility of banking agents among the surveyed population.
Read Also: Over 51% of Nigerian women don’t have bank accounts- Report
The volume and value of banking agents’ service (POS agents or mobile money)
According to the report, there has been a significant surge in both the volume and value of Point of Sale (POS) transactions over the years. POS transactions involve the measurement and analysis of the number of transactions and the monetary value of those transactions processed through Point of Sale systems within a specific timeframe.
In 2012, POS transaction value was recorded at ₦0.05 trillion, accompanied by a transaction volume of 2.6 million. However, fast forward to 2021, the figures have witnessed remarkable growth. The POS transaction value escalated to ₦6.4 trillion, while the transaction volume soared to 982.8 million.
Also, despite stiff competition among other financial services asides from traditional banks when comparing the transaction value of POS, eBillsPay, and mobile money over the years, POS still emerges as the frontrunner, outperforming the others.
From 2014 to 2021, the transaction value and volume of eBillsPay have experienced significant growth, surging from ₦0.0 trillion and 0.6 million to ₦2.2 trillion and 1.1 million, respectively. Similarly, mobile money has witnessed a remarkable expansion, with its transaction value and volume soaring from ₦0.03 trillion and 2.3 million in 2012 to ₦5.1 trillion and 377.3 million in 2021.
This data highlights the substantial increase in the utilization of Point of Sale systems for conducting transactions. It also signifies a shift towards the widespread adoption of POS technology as a preferred method of payment, reflecting the evolving landscape of financial transactions in Nigeria.
Point of Sale (POS), the new bank
The number of POS agents has increased dramatically throughout the years. They have become ubiquitous, penetrating every corner of the country and providing simple access that traditional banks cannot provide. They have indeed played an important role in promoting Nigeria’s financial inclusion.
In 2004, there were only 89 commercial banks in Nigeria, but by 2022, there were 33 banks with various banking licenses in the country, thanks to acquisitions and mergers that dominated the field in 2005. Despite this, the industry requires more help.
This is where the fintech companies come in. As of December 2022, the country had 291 active fintech startups, indicating widespread adoption. Although many of these fintechs share a common goal of “banking the unbanked,” one approach that has notably excelled in achieving this objective is agency banking.
Agency banking have looked beyond the customers’ wants to understand their needs, i.e., leveraging the potential of rural areas and becoming the most accessible and preferred option for both withdrawals and deposits.
Nigeria leads the growing trend of financial inclusivity among other African countries
Based on the report, Nigeria continues to lead the way for financial inclusivity in Africa. 54,314,017 of its population aged 15 and above have bank accounts. This is a significant number. However, when it comes to internet access, the figure stands at 29,793,611, indicating a lower percentage of the population having online connectivity.
On the other hand, mobile phone access among individuals aged 15 and above is quite extensive, with a notable count of 87,918,717. These statistics highlight the varying degrees of financial inclusion, internet access, and mobile phone usage within Nigeria.
According to a report, the number of active bank accounts in Nigeria experienced significant growth between 2021 and the end of December 2022. In 2021, there were approximately 133.5 million active bank accounts.
However, by the end of December 2022, an impressive 18.7 million new active bank accounts were added, bringing the total number of active bank accounts to 152.2 million. This surge in active bank accounts highlights the increasing adoption of banking services and the growing financial participation among individuals in Nigeria.
It is no doubt that agency banking, POS agents and other financial models have played a pivotal role in bridging the gap and ensuring financial services are within reach for individuals who were previously underserved.
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