By Alexander Chiejina.
A recent report on the Nigerian financial serviced market, says Opay and MoniePoint, two fintech organisations, dominate agency banking in Nigeria with the largest number of Point of Sale (PoS) agents. In an agency banking model, financial institutions, banks, and even companies use independent contractors, such as retail establishments, or private citizens, to handle their banking needs.
As a result, agency banking agents, who offer a wide range of services, including account opening, bill payment, cash-in and cash-out services, deposits and withdrawals, and account balance queries, have emerged as a key force in the nation’s drive for financial inclusion.
The research states that OPay, which has 563,252 PoS agents and 1.5 million banking agents overall, tops the list of financial services providers with the most PoS agents in Nigeria, accounting for 37.17 percent of the market.
The fintech startup, which was established in Nigeria in 2018, has raised $570 million in total, and its current market worth exceeds $1 billion. It began by offering motorcycle-hailing and food-delivery services before dominating mobile money and agency banking in Nigeria. However, it has concentrated on financial services, which have expanded rapidly during the past year.
The report also shows that Moniepoint follows OPay closely behind with 303,946 PoS agents, the second-highest agency banking network, with a 20.06 percent market share.
Prior to TeamApt, the startup Moniepoint was established in 2015 to create mobile apps for banks. In 2018, following a $5.5 million Series A, it entered the agency banking market. With 160,740 PoS agents nationwide, First Bank has a 10.60 percent market share of all PoS agents in the nation. This put it in third position among the largest players in the market nationwide. In 2015, First Bank birthed Firstmonie, its agency banking division. By enabling Firstmonie agents to carry out tasks including opening bank accounts, receiving deposits and withdrawals, and money transfers, the dependence on over-the-counter transactions was to be decreased.
First Bank reported that since their introduction, Firstmonie agents had handled transactions totaling N22 trillion in value in 2022. With 35,490 PoS agents, Quickteller is the fourth largest PoS agent employer in the nation. With this figure it holds a 2.3 percent market share among all agency banking networks in the nation. One of Nigeria’s first fintech unicorns, Interswitch, birthed Quickteller.
With 26,013 PoS agents in Nigeria, Access Bank is in fifth place with a 2.34 percent market share. With 18,879 PoS agents nationwide, Ecobank holds a 1.24 percent market share. 2,936 Point of Sale (PoS) employees from Union Bank make up 0.19 percent of the nation’s agency banking networks.
With 2,028 PoS agents, or 0.08 percent, First City Monument Bank (FCMB) is tenth on the list. Keystone Bank, with 1,163 PoS agents —or 0.1 percent— ranks 10th on the list.
The report pointed out,however, that organisations such as Paga, PalmPay, and others who manage agency banking networks in the nation were taken into account, adding that one agent might be using many organisations.
Only recently, PalmPay announced that it has over 500,000 PoS in June 2023, a claim made after the release of the report.
But Yinka Awosanya, lead researcher for the report, claimed that only data approved by the corporations were used by the companies that did provide their information. Point of Sales agents have become popular in the country as it is estimated that 77 percent of Nigerians without bank accounts or mobile money accounts, have used a PoS or mobile money agent, according to the analysis of a survey on more than 4,600 Nigerians.
Agency banking is essential in fostering financial inclusion because it is accessible to those without bank accounts. It emerged in the middle of the 2000s as economically developing nations looked for ways to make financial services accessible to all.
Financial inclusion is the concept underlying ensuring that all people may access financial services. Through an increase in commerce and economic activity, it significantly contributes to economic development and poverty reduction.
This banking idea has quickly gained popularity, particularly in Africa. M-Pesa’s outreach in Kenya was incredibly effective, and fintech businesses have adopted this strategy throughout sub-Saharan Africa. When the Central Bank of Nigeria (CBN) published instructions on how institutions might operate and handle agent banking in 2013, Nigeria followed the trend.
The agency banking concept has been extremely successful, and it has also been adapted to Nigeria, where it has dominated the financial landscape.