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Renaissance Capital’s Adesoji Solanke on how Nigeria's agency banking space is evolving
Renaissance Capital says Nigeria’s agency banking space will follow a unique path quite unlike what has played out elsewhere. With a population of over 200 million people, how will the interplay between Nigeria’s key stakeholders in the financial services space cater to the needs of this growing population? Adesoji Solanke, Director for Frontier, SSA bank and Fintech Research at Renaissance Capital joins CNBC Africa for more.
Mon, 26 Jul 2021 11:51:21 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The rapid transformation of Nigeria's agency banking sector towards digital solutions has been accelerated by the impact of COVID-19.
- Nigeria's unique regulatory landscape poses challenges for telco-led models in agency banking, driving the need for innovative revenue-generating strategies.
- The strong banking lobby in Nigeria has led to battles between banks and telcos in the agency banking space, highlighting the importance of collaboration among key stakeholders.
Nigeria's agency banking space is undergoing a significant transformation, with the emergence of new players and evolving business models. Adesoji Solanke, Director for Frontier, SSA Bank and Fintech Research at Renaissance Capital, sheds light on the current landscape and the potential future path of agency banking in Nigeria. With a population of over 200 million people, the interplay between key stakeholders in the financial services space is crucial to meeting the needs of this growing population.
The agency banking sector in Nigeria has witnessed a rapid shift in recent years, with a move away from traditional cash-based transactions towards digital solutions. Adesoji Solanke highlights the key players dominating the landscape, categorizing them into three main groups: independent agency banking businesses, bank-led models, and telco-led models. This shift has been accelerated by the impact of COVID-19, which has further emphasized the importance of digital financial services.
Looking ahead, Solanke predicts that agency banking in Nigeria will continue to evolve, taking a unique path compared to other African markets. Unlike countries such as Kenya and Ghana, where telco-led models have thrived, Nigeria's regulatory landscape presents challenges for telcos to participate in agency banking without a PSB license. However, innovative approaches, such as building high transaction value businesses, are driving profitability even without a PSB license.
Solanke also emphasizes the strong banking lobby in Nigeria, which has sparked battles between banks and telcos in the agency banking space. While the model was inspired by India, which has faced challenges with its own agency banking sector, the key lesson learned is the need for more enabling regulations to support revenue generation for players. Without regulatory support, businesses may struggle to sustain profitability and could face the risk of failure, as seen with some international players in the Indian market.
As Nigeria's agency banking space continues to evolve, collaboration among key stakeholders and a supportive regulatory environment will be essential for driving sustainable growth and financial inclusion for the country's expanding population.
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