It is quite ironic that the lockdown of several parts of the country aimed at controlling the spread of the COVID-19 pandemic in Nigeria is helping to unlock new opportunities for mobile money and e-banking platforms. Based on new data from Nigerian Inter-Bank Settlement System (NIBSS), the settlement platform for electronic transactions, there has been a significant surge in the transactions volume and value that do reflect a growing acceptance of financial technology solutions.
The volume of mobile money transactions increased 7% month-on-month (m-o-m) in March to 8.8 million transaction from 8.2 million the month before. However, in comparison to the same time last year, the volume of mobile money transactions increased by about 600% (1.26 million; March 2019). The volume of transactions in the first quarter of this year alone (24.35 million) are about 60% of the total volume for 2019 (41.2 million).
The value of transactions recorded even larger gains. On a month-on-month basis, the value of transactions rose 14.5% to N169.8 billion in March from N148.3 billion in February this year. However, there is a more remarkable growth when compared to the same time last year. Against March 2019 (N38.44 billion), transaction value rose by over 340%. The value of mobile money transactions for the first quarter of this year N451 billion) alone represent about 55% of the entire value of transactions for 2019 (N828 billion).
While the lockdown of some of the biggest states in Nigeria either by the Federal Government or by various state governments such as Lagos, Rivers, Delta, Kano and the federal capital – Abuja have had huge negative consequences on the economy, it has been quite the opposite for the electronic payment platforms. At the moment, banks in these states under lockdown are only providing skeletal services to customers. Thus, making a case for electronic payment platforms has become the logical solution for customers seeking to effect financial transactions.
Without a doubt, the current lockdown not only in Nigeria but in several parts of the world, would change the way we work and transact business even after this pandemic may have ended. In the past in Nigeria, it took a bit of convincing from banks and Financial Technology (FinTechs) to transition clients – especially of the older demographics – to online or mobile banking solutions. However, the current lockdown conditions provide a big boon to electronic banking and mobile payment platforms that could last even beyond the pandemic. One of the arguments against electronic and mobile banking platforms has been the issue of security and safety but those fears pale in significance to being unable to transact as a result of the lockdown.
FinTechs providing payment solutions are primed for growth under the current climate. It could also be a chance to pursue growth of FinTech payment solutions especially on mobile devices – particularly feature phones – outside of the big cities like Lagos and Abuja and into other states across the country and even semi-urban and rural areas. FinTech transaction solutions that can be adapted on feature phones will be meeting a huge need at a time like this. Beyond meeting needs, it will also help shape consumer behjaviour while deepening financial inclusion.
Overall, FinTech payment solutions are an easier sell to clients now than at any time before this era. This should help FinTechs providing valuable and much required financial inclusion initiatives with stronger credentials during capital raising.