With the Central Bank of Nigeria’s (CBN) introduction of the Mobile Money Regulatory Framework, mobile banking in Nigeria began in the early 2000s and gained huge traction around 2010. The framework aimed to promote financial inclusion by taking advantage of mobile phone Technology to provide banking services to the unbanked and underbanked populations. The CBN’s approval of mobile money operators, in collaboration with telecommunications companies and banks, marked a key milestone in the evolution of the industry. Early pioneers such as Paga and Firstmonie (by First Bank of Nigeria) were also quite instrumental in popularizing this mode of banking.
Further, the widespread adoption of mobile phones, as well as with Nigeria’s evolving digital infrastructure, played an important part in the rapid growth and acceptance of mobile banking services. This transformation has significantly enhanced access to financial services, contributing to Economic Growth and improving the overall banking experience for millions of Nigerians. Before the advent of mobile banking in Nigeria, traditional banking methods were the norm, involving in-person visits to bank branches for most financial transactions.
Long queues, paper-based transactions & limited ATMs pre-mobile solutions.
Customers had to physically visit bank branches to perform transactions such as deposits, withdrawals, transfers, and account inquiries. It often meant long queues and extended wait times. Also back in the day, transactions were predominantly done with paper. Customers filled out forms for deposits, withdrawals, and other banking services. Passbooks and check books were commonly used for account management. Bank tellers were the primary point of interaction for customers. Tellers handled cash transactions, provided account information, and assisted with various banking needs.
Automated Teller Machines (ATMs) were available then for basic transactions like cash withdrawals, balance inquiries, and, to some extent, funds transfers. But their coverage was limited compared to today. For larger transactions, customers relied on bank drafts and cheques. These instruments were essential for business transactions and payments, requiring manual processing and verification. As well, some banking services were available through postal systems, particularly in rural areas. Customers could use postal services for savings accounts and other basic banking needs. At that time, banks maintained manual records of all transactions, which were later digitized as banking systems evolved. This manual process was time-consuming and prone to errors.
Strong financial system possible as a result.
Driven by technological advancements and the pursuit of financial inclusion, this technology has become increasingly widespread in Nigeria. Of course, the journey started in the early 2000s, but it took a major turn around 2010 when The Central Bank of Nigeria (CBN) introduced the Mobile Money Regulatory Framework. This regulatory support was needed in order for the government to allow mobile money operators to be licensed and in order to promote partnerships between banks and telecommunications companies.
Mobile phones are so commonplace that they even provide a special chance to overcome the financial inclusion gap. Those who use mobile banking solutions were able to do a lot of tasks from the comfort of their mobile devices, including money transfers, bill payments, and account queries. The change decreased transaction costs, increased security, and made financial services more accessible. The ease with which on-the-go banking provided — removing the need for in-person trips to bank locations and providing round-the-clock access to financial services — fuelled its quick uptake. Additionally, programs like the CBN’s Cashless Nigeria Policy further fast-tracked its adoption, and it encouraged digital transactions and lowering dependency on cash.
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Over the years, a strong digital financial ecosystem has been established as a result of the integration of mobile banking with other digital services including internet banking and mobile wallets. Millions of Nigerians have seen an improvement in their general quality of life as well as economic growth and assistance for small and medium-sized companies (SMEs) because of this ecosystem. With the ongoing advancement of technology, mobile banking in Nigeria is expected to get even more advanced, providing a greater array of services and becoming further integrated into the everyday life of the populace.