Firstmonie, the agency banking division of First Bank of Nigeria, has emerged as the largest bank-led player in Nigeria’s agency banking market, processing over ₦1.1 trillion in transactions in 2023. According to data from payments provider Interswitch, this figure exceeds the combined transaction volumes of Access Bank, Zenith Bank, Stanbic IBTC, Union Bank, Ecobank, FCMB, and Fidelity Bank.
Despite this dominance among traditional banks, Firstmonie has faced growing competition from fintech companies like Moniepoint, Opay, and Nomba, which have gained significant market share. The report revealed a decline in Firstmonie’s transaction volume from ₦2 trillion between April 2021 and March 2022 to the ₦1.1 trillion recorded in 2023.
The cash scarcity in early 2023 played a pivotal role in reshaping the agency banking landscape. Traditional banks, including First Bank, struggled to handle the surge in digital payment demands, while fintech platforms quickly capitalized on the situation. Fintech companies benefitted from their agility, offering faster agent onboarding, innovative services, and widespread adoption of mini POS terminals. These advantages allowed fintech players to meet consumer needs more effectively during the cash crunch, which saw a rise in POS transactions.
Firstmonie’s stricter agent requirements, such as the need for a registered business or corporate account, limit its ability to compete with fintech companies like Moniepoint and Opay, which have more relaxed criteria for agents. While fintech companies have leveraged venture capital funding to subsidize services and expand rapidly, their reliance on external funding presents vulnerabilities as operational costs increase and VC funding becomes less accessible.
Some fintech companies, such as Kippa Pay, have already exited the market due to shrinking margins, while others, like Opay and Moniepoint, continue to dominate by subsidizing costs through VC funding. Firstmonie, however, benefits from its position within a bank with sustainable revenue streams, including loans and transfers, which provide financial stability despite market challenges.
As inflation drives up costs and venture capital funding tightens, the competitive advantage of fintechs may begin to wane, potentially shifting the dynamics of agency banking in favor of traditional banks like First Bank. While fintech players currently dominate the broader market, Firstmonie remains the benchmark for bank-led agency banking in Nigeria.
