Banking is being redefined

MTN Nigeria has formally penetrated the financial services sector in a big way. As Nigeria’s leading telecom company, this new development should be of concern to traditional financial institutions.

According to Premium Times, a news website, “MTN Nigeria has announced that its subsidiary, Yello Digital Financial Services Limited (YDFS), a subsidiary of MTN Nigeria,  was granted full Super Agent Licence by the Central Bank of Nigeria (CBN). The license will enable MTN to convert their existing airtime agents and recruit other small businesses to distribute financial services, the company said in a disclosure posted to the Nigeria Stock Exchange. The Super Agent license enables the scale launch of MTN Nigeria’s fin-tech strategy, as part of its effort to deepen financial inclusion in the country.”

MTN Group has adopted a common strategy across different markets. A successful product in one market is rolled over to other markets. It is likely that MTN will apply for similar licenses in the other markets it operates especially Uganda, which was the first to embrace mobile money. Considering a huge market share at more than 52%, this represents a major threat to financial institutions that have been surviving through a partnership with MTN as agents.

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With these developments, banks cannot continue to plan in a traditional way of vision, mission, goals, objectives, analysis, choices and implementation and wait for 12 months to review results. This approach that was popular during the first industrial revolution is outdated in this era of the 4th Industrial Revolution, where events are changing so fast that banks must adopt. Instead of planning to beat the competition, banks must plan to be unique and value-adding to their respective target markets.

The old approach of planning is wrong because it assumes the organization knows the potential competitors. Today, a strategic partner is increasingly becoming a strategic competitor. Imagine MTN Uganda obtaining a similar license from Bank of Uganda. All of a sudden, the company will start competing with Stanbic bank which is currently the strategic partner for mobile money services.

Winning banks must change the mindset of all middle and top management by involving them in strategic focus initiatives. We all know compelling innovative ideas comes from the people at the frontline of the business yet many of such people are left behind at strategy review retreats. This is bad. You must identify strategy champions across the business as well as provide easy to complete data collection tools to pick the ideas of critical staff so that you improve overall strategic focus. It is high time operations staff put a focus on the medium-term growth instead of focusing about short term only. All your staff must know the “why” and their role in contributing to it. That is where sustainable growth will come from.

To attend our strategic focus practical-class for your team, contact us here.

Copyright Mustapha B Mugisa, 2019. All rights reserved.

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