Too Much Money as Moniepoint set to secure A Commercial Bank License
Moniepoint, Nigeria’s fintech giant, is making strides toward securing a commercial banking license from the Central Bank of Nigeria, say three people with knowledge of the situation. Although the approval process may extend up to a year, these talks mark a pivotal step in Moniepoint’s long-term vision to broaden its retail banking footprint and grow its influence within Nigeria’s financial sector.
With a commercial banking license, Moniepoint could enhance its product lineup to include international transactions and treasury services—both solid revenue streams in the banking industry. The license would also permit Moniepoint to establish physical branches, addressing Nigeria’s low-trust environment in traditional banking by offering a more tangible presence.
Venturing into foreign currency transactions presents a substantial revenue opportunity, as seen in Nigeria’s top banks, which collectively generated around ₦3.37 trillion in the last nine months from this market segment. Securing the license would place Moniepoint ahead of competitors like OPay, positioning it as Nigeria’s first fintech to obtain a commercial banking license. This strategy resembles Nubank’s approach in Latin America, where the company sought a banking license in Mexico after capturing a large share of Brazil’s banking market.
The pursuit of a commercial banking license underscores Moniepoint’s ambition to deliver financial services with greater efficiency than its competitors. Though it entered the fintech space relatively late, Moniepoint has already become a key player in agency banking, leveraging technology and an extensive network of agents.
Moniepoint declined to provide comments on the development.
Should the license be granted, Moniepoint will face an established landscape with 24 existing commercial banks. The fintech hopes to leverage its retail banking momentum, launched in August 2023, to stand out. Although the exact size of its customer base remains undisclosed, industry insiders suggest it ranks just behind OPay and ahead of Kuda, which serves around 7 million users. This rapid rise puts Moniepoint’s customer count above newer commercial banks like Globus Bank, which reported 60,000 clients in 2022.
There is considerable opportunity for disruption, as Nigeria’s major banks are often criticized for providing limited service to a large customer base. Moniepoint, with a commercial banking license, could shake up this landscape. If successful, it would join the ranks of prominent banks like FirstBank and Zenith Bank, which rely heavily on their extensive network of agents.
Moniepoint started preparing for this licensing pursuit in early 2024, shortly after bringing on Bayo Olujobi from Stanbic IBTC as CFO, according to a source. The lengthy vetting process by the Central Bank of Nigeria could take a year, during which Moniepoint has ramped up its compliance capabilities, adding more than a dozen compliance and fraud-monitoring specialists since January.
The capital requirement for the basic commercial banking license—a regional license—stands at $30 million, a fraction of Moniepoint’s recent $110 million capital raise that solidified its unicorn status. Beyond funding, Moniepoint will also have to meet regulatory mandates to establish physical branches across Nigeria, including provisions like secure vaults and proper facilities.
Though commercial banks face more stringent regulations, acquiring the license would signal Moniepoint’s readiness to operate within a more mature regulatory environment. This move is timely, given that the Central Bank’s tighter stance toward fintechs since December 2023 has posed hurdles for numerous startups.
A commercial license would enable Moniepoint to move beyond the limitations of its current microfinance bank license, which restricts both its product scope and its geographic reach beyond Nigeria’s South-West region—an obstacle in a vast, diverse market like Nigeria’s.
To circumvent these geographic limitations, Moniepoint has set up “support offices” nationwide, maintaining a physical presence in regions where full branches aren’t feasible. However, these offices do not address product limitations. Microfinance banks in Nigeria are barred from offering advanced services like corporate banking, investment banking, and foreign currency transactions—all profitable sectors for commercial banks. A commercial banking license would open these avenues for Moniepoint, diversifying its revenue sources beyond microloans and basic savings accounts.
For context, Access Bank, Nigeria’s largest by assets, made just 29.4% of its profit from retail banking in 2023, with commercial and corporate banking contributing the majority. Similarly, tier-1 bank United Bank for Africa reported ₦8.2 trillion in retail deposits, dwarfed by ₦23 trillion from corporate clients.
In response to the Central Bank’s April fintech ban, Moniepoint has ramped up compliance efforts, hiring a substantial number of fraud and compliance specialists.
While a commercial banking license would bring increased regulatory demands and capital obligations, it promises long-term benefits such as broader service offerings, enhanced credibility, and greater growth potential—making it a highly strategic move for Moniepoint.
