A new report by Guaranty Trust Bank says the decision of the Central Bank of Nigeria to license telecommunications companies for payment services will not bode well for financial institutions in the country.

In its report, Nigeria Macro-Economic and Banking Sector Themes for 2019, the banks said the payment service banks (PSBs) 'is threat to banks' and would compete with commercial banks for revenue.

“A more compelling threat, however, relates to the recent decision by the CBN to license Payment Service Banks (PSBs) to facilitate transactions in remittance services, microsavings and withdrawal services in rural areas,” it said in the report released on Monday.

Describing the move as a positive for customers, the report said it would improve customer service and digitalisation of banking services while enhancing financial inclusion.

In 2018, MTN Nigeria and Airtel had announced plans to delve into mobile moneyservices with the former expressing hopes that it would get the CBN’s approval and launch in the second quarter of 2019.

The PSB license will, however, not allow the telcos offer lending services and participate in the foreign exchange market.

In the report, the tier one lender said the capacity of financial technology (FinTech) companies to gain a significant market share would be limited in the absence of collaborations.

The bank said the merger between Diamond and Access banks could trigger other mergers in the sector and increase the competitive landscape in the industry.

The merger, which is expected to be complete in April, will produce the country’s largest bank; displacing First Bank who has occupied the position for years.

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