Nigerians woke up on Friday the 2nd of April to discover that the nation’s biggest Telecommunications company, MTN had been disconnected from all commercial banks channels (except Zenith bank).75 million subscribers could not use the USSD service or banking app platforms.
What went wrong?
In a letter addressed to partners shared by multiple sources, MTN said with effect from April 1, 2021, it was reviewing the channel structure and discounts. The changes, it said, were as a result of industry realities and would ensure commensurate recognition and reward for each partner’s performance.
Part of the discount review includes the commission given to Banks for using USSD for banking services. MTN reduced the banks’ commission from an average of 3.5 per cent to 2.5 per cent. This dispute then resulted in most Nigerian lenders cutting off MTN Nigeria from their banking platforms, making it impossible for millions of customers to buy credit for their phones.
It has been said in some quarters that the crisis was borne out of the failure of the banks to pay the telcos the N42 billion they owed since the last eight months.
This block then solidified the fact that the banks were willing to cut off services to customers in order to protect their profits.
Step in Fintech
So apparently, MTN customer service representatives were having a field day as customers let out their frustration all over the various social media channels. Banks too weren’t left out!
There had to be a solution, Customers had to recharge their phones (without buying recharge cards)!
Step In Fintech!!
The bedrock for fintech startups has always been creating financial solutions and that is exactly what they did as MTN announced payment solutions platforms Flutterwave, Jumia Pay, PalmPay, OPay, Kuda, Carbon, BillsnPay e.t.c as alternative methods of recharging.
Great news for the Ecosystem!!
That’s a potential market of over 30 million customers!!!
Customers immediately started trying out the various platforms and loved their experience, giving great reviews and even discovered that they could get bonuses and discounts for recharging!
Traditional banks however sensed the threat and with the intervention of regulatory bodies, MTN surprisingly reverted to the previous commission percentage. It is a case of fragile peace however as MTN has explored alternative channels thereby creating an interesting case of organisational ambidexterity
Wow, exciting times ahead!
With the Conventional Power of Mainstream Banking going down and the recent USSD hassle with MTN opening our eyes to other third party Systems for Airtime and Data through Fintech platforms, it is high time banks realise they have a real competitor in Fintech companies.
It is however not time to influence government regulations that directly affect their competitors, a regular trick in the play book of the notorious body of bank CEOs headed by Herbert Wigwe.
This is when banks also become ambidextrous and plan for the future!