According to data collected by payment processor Interswitch, First Bank of Nigeria’s agency banking arm, Firstmonie, ranks as the leading bank-led agency in Nigeria’s agency banking market. In 2023, Firstmonie facilitated over ₦1.1 trillion in transactions, a volume exceeding the combined total handled by Access Bank, Zenith Stanbic IBTC, Union, Ecobank, FCMB, and Fidelity Bank.
Notably, the Interswitch report doesn’t include data from the Nigerian Inter-Bank Settlement System (NIBSS), another significant payment processor in the country. According to the report, Firstmonie, despite its impressive performance, was surpassed by five venture capital-funded fintech organizations: Moniepoint, Opay, MFS Africa (Onafriq), and Nomba, in the rating of transaction volume.
From April 2021 to March 2022, prior Interswitch reports indicate that Firstmonie executed the second-highest volume of agency banking payments, amounting to ₦2 trillion. This was double the amount managed by Firstmonie in 2023.
From 2021 to 2022, three bank-led agency banking services were within the top 10. However, the latest report indicates a shift in momentum and market share, with fintech companies such as Nomba gaining traction, processing nearly 2.5 times the amount it did the previous year, equating to ₦1.14 trillion.
The early 2023 cash crunch in Nigeria could have contributed to the increased market shares of agency banking players. Amidst the cash scarcity, traditional banks’ infrastructure struggled to handle the stress of increased digital payments, thus destabilizing platforms including point-of-sale (POS) agents. This situation provided an opening for agile fintech firms, whose platforms experienced an upsurge in usage.
Evidence of this can be seen in the performance of Paga, a longstanding fintech player, which processed an impressive ₦147.1 billion in transactions, over double the ₦68.3 billion it processed via Interswitch’s platform between April 2021 and March 2022. This amount even surpasses the transaction volume of Access Bank’s agency banking business.
Factors such as the perceived agility and adaptability of fintechs, their simpler agent onboarding, expansive reach via mini POS terminals, and innovative solutions are thought to have influenced this shift. Moreover, the 2023 cash crisis underscored the limitations of traditional banking infrastructure and drove users towards agency banking—an area fintechs were quicker to tap into.
Fintech firms, being more readily accessible than bank-led agency banking providers, also have an edge. While Firstmonie has the largest bank-led agent network in Nigeria, with over 200,000 agents, its stringent agent requirements exclude many small and medium businesses. In contrast, fintech competitors like Moniepoint and Opay have more lenient requirements.
Competition is fierce among fintech firms, as agency banking is a significant source of income for them, unlike banks that have multiple revenue streams. Even with dwindling margins, some firms manage to survive or close down, as exemplified by Kippa Pay’s exit in 2023.
Fintech companies such as Opay and Moniepoint, which have received funding, can use this capital to subsidize their products and services, gaining market share. Additionally, the speed at which fintechs operate, compared to bureaucratic banks, allows for quicker capital investment.
However, the dynamics may soon shift favorably for banks, with factors such as rising inflation increasing the cost of POS devices and reducing margins. As venture capital funding becomes scarcer, some fintechs may give way to banks with sustainable businesses capable of supporting the growth of their agency banking units.
