This strategic move aligns with the South African Reserve Bank's (SARB) recent policy changes granting non-bank entities direct access to the national payments system, a previously exclusive privilege for established banking institutions.
Tim Masela, head of the National Payments System department at SARB, stated, “We believe that we should move with the times and open up the system for the entry of non-banks.”
MTN has already been active in the financial services sector through its Mobile Money (MoMo) platform, which has played a crucial role in delivering payment and money transfer solutions throughout Africa.
The MoMo service allows users to utilize their mobile numbers as digital wallets, enabling transactions without the necessity of traditional bank accounts. This offering primarily caters to small businesses and low-income consumers who mainly rely on cash transactions.
At present, MTN partners with licensed banks, including African Bank, to provide these financial services. However, with the recent policy changes from SARB, MTN is now in a position to pursue its own banking license, thereby removing the need for intermediaries. In Nigeria, the company has already submitted applications for PSSP and PTSP licenses.
The SARB's decision to permit non-banking entities access to the national payments system marks a significant advancement in promoting innovation and competition within the financial sector. By granting fintech companies direct access, the central bank aims to improve financial inclusion and offer consumers a wider array of services.
MTN's entry into the banking sector aligns with a growing trend among telecommunications companies in Africa that are expanding their offerings to encompass financial services. The combination of telecom and banking could significantly alter the financial environment, especially in areas where access to conventional banking is restricted.
Nonetheless, MTN is likely to encounter several obstacles, such as rigorous regulatory standards, competition from well-established banks, and the necessity to foster consumer confidence in its newly launched banking services.