Telecoms companies a growing challenger to African banks - report

accreditation
African banks see money service offerings by mobile phone companies as a threat to their market share.
African banks see money service offerings by mobile phone companies as a threat to their market share.
Getty Images
  • Banks see the entry of mobile companies into banking services as a threat to their market share. 
  • Lower cost of communication and increased mobile phone use has aided Africa's digital innovation.
  • MTN and Vodacom are some of the African mobile operators with financial offerings.


Banks in Africa see the entry of telecommunication companies into banking services as a threat to their market share as more mobile firms venture into the sector, a report on digital banking in the continent has found.

While digitisation has transformed banking, with more African banks increasing their digital services, the rise in the competition posed by mobile companies has disrupted the market, supported by growth in internet penetration and access to mobile phones. 

The continent's largest mobile operator, MTN, has made significant inroads in the financial services, and is in the process of setting up a bank in its biggest market, Nigeria. The firm was recently granted a licence to establish Mobile Money Payment Service Bank in Nigeria, where its mobile money service is reaping great financial rewards for the company.

MTN has been aggressively growing money services in several African countries and the offering boasts over 57 million mobile money users, according to latest operator's latest financial report.

The African Digital Transformation Report 2022 noted the entry of telcos into banking services as one of the threats to African banks. More than 100 banks participated in the survey aimed at establishing how the banks perceive and promote digital transformation.

It stated that telecom companies entering the industry to provide financial services were considered a "significantly bigger threat to banks' market share than the rise of fintechs and challenger banks".

"Telecoms companies have sought to take advantage of their huge customer bases to move into financial services in order to compensate for a falling share of the voice phone service market in the face of competition from messaging apps."

Gap in the market

In Nigeria alone, MTN Nigeria's mobile money service has attracted 9.4 million active users since launching in August 2019, the company revealed in January. The volume of transactions performed through the service rose by 167% to 137.5 million in the 2021 full financial year.

Apart from airtime purchase services, mobile money allows users to make money transfer, payments and cash withdrawal from authorised agents.

Vodacom - which has a presence in a Tanzania, the Democratic Republic of the Congo, Mozambique, Lesotho, and Kenya - operates a similar money service known as M-Pesa. 

Mobile companies have highlighted that their foray into money transfer is services is takes advantage of the continent's large population of unbanked and underserved groups. 

The growth in digital service has benefitted from mobile phone use in Sub-Saharan Africa, where there were 469 million mobile customers by the end of 2019, and the cost of communications has been falling.

"The continent's biggest telecoms companies - including Vodacom, MTN and Telkom - lowered their mobile fees, with MTN recording a 28% increase in mobile money transactions in the first half of 2020."

The report also noted the establishment of a "purely digital bank" by French telecoms company, Orange, which launched at the start of the pandemic in 2020. Orange operates in Ivory Coast, Mali, Burkina Faso, Ghana, Guinea, Liberia and Senegal, and its digital bank drew five million customers in April and May alone.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
16.41
-0.1%
Rand - Pound
19.87
-0.2%
Rand - Euro
16.69
-0.1%
Rand - Aus dollar
11.48
+0.4%
Rand - Yen
0.12
-0.1%
Gold
1,777.74
+0.1%
Silver
20.13
-0.1%
Palladium
2,155.50
-0.2%
Platinum
935.37
-0.3%
Brent Crude
92.34
-3.0%
Top 40
64,726
0.0%
All Share
71,505
0.0%
Resource 10
65,387
0.0%
Industrial 25
87,072
0.0%
Financial 15
16,239
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders