Can Mobiles benefit Nigerian Micro Finance Banks?

Micro Finance Institutions in Nigeria though still struggling to get a piece of the pie from stronger and more capitalized commercial Banks, but still coming up with impressive returns in the last few years. More than 840 MFI’s are currently operating in the Nigerian market space while many others are getting ready to open to public in the next few months.

Some viable MFI’s are posting results that are close to what established commercial Banks with over 50 Branch networks were earning before the pre – consolidation era when they had to increase their capital Base.

Virtual Banking and Mobile banking will give massive leverage to the commercial Banks in the next few months and this will massively differentiate them further from the MFI’s and widen the gap. In the evolving scenario, what opportunities are open to the MFI’s? Can they take on the Mobile channel as a strategic channel to play catch up? Will the Banks just use them as a cash in / cash out points for their Mobile money roll out plans?

From the regulatory point of view, MFI’s are allowed to play in mobile landscape but Infrastructurally, they are limited by their access to technology platforms like the financial switches. They still not directly connected and will have to get connection via a third party Bank.


Mobile Banking and mobile money is the easiest route to go for any growth oriented MFI in Nigeria with wide disparate demographics and prohibitive cost for Brick and mortar Branch roll outs. Mobile presents a strong compelling advantage for the MFI’s.


Though the Mobile is an unfamiliar terrain for most operators in the financial services sector but opportunities abound. The question is, what is out there.

64 million mobiles subscribers is a significant and potential customers base that can be engaged using the mobile channel.Network coverage is nearing 70 percent of total landmass in Nigeria, an extensive reach is what the Mobile channel offers. Mobile Phones is also what they already have with negative acquisition cost to enable potential customers use the service.

Using Mobile Phones, the MFI’s can develop independent collection points, therefore cash in / cash points using the Human Atm models across areas of operations and in concentrated commercial areas like the Major markets without a need to physically have a Brick and Mortar presence.

Increase the market penetration by serving the currently unbanked population leveraging on their Mobile and Network coverage to bring services to these group of financially excluded at a significantly lower cost to the customer and less paper work which is always a barrier for many semi Illiterate and illiterate citizens which mostly constitute the majority of the financially excluded.

Getting more products to the existing customers is a way to retain and keep customers. Many other products can be bundled into the mobile service provisioning of the MFI’s to make it more attractive to existing customers.

Remittance business which has been the cash cow of commercial banks are areas where the MFI’s can change the business models. Online remittance gives them the reach to the potential senders; worldwide while the Mobile Phone of the local receiver is the connection point of engage for the MFI’s.

To save cost and achieve competitiveness in the face of biting Global Cash crunch and in local operating environments in Nigeria, Virtual and Mobile Banking is not a question of when for the MFI’s, It is a question of How.


Emmanuel Okoegwale
emmanuel@mobilemoneyafrica.com