It’s 5 years since I’ve been shilling my predictions, and here again, are my top 10 predictions for 2022. Although, if any of them comes through, I owe you a beer.
As always, even though nobody pays attention, these predictions are largely educated guesses being that I have an advantage of seeing a lot from the wobbly perch on which I sit. But then, my candid advice is to take them with a grain of salt.
Now let’s dive into what Oracle has predicted for the coming year.
#1 A global giant comes to play. I will pay you with WhatsApp
Stripe came in 2020 to buy Paystack but not to play. But in 2022, my blurry eyes see a global player coming to play big time. But then why would a global player come? The market is hot as hell; alternative payments methods such as virtual accounts have proven to be very successful; API players like OnePipe and Mono are doing very well and shipping data around like smugglers, and lastly, open banking would go live once the standards are approved by the CBN. There is simply no better time to be here. My bets are on WhatsApp to come back with payments within their chat app. WhatsApp isn’t a stranger to payments; they have started, albeit with limited success, in Brazil and India.
#2 MTN launches PSB. Only a few super agents are left standing. Top 5 banks on notice
I predicted that MTN would get its license and they did. Give me a round of applause! Karl, the CEO of MTN, is a ruthless executioner and following the spanking that banks gave him last year on USSD, he has more than enough incentives to do a good job. And he will; never keep Karl behind your back. MTN would drive its PSB so hard and super agents so amazingly, they would quickly suck the oxygen out of the market. The prediction here is that I expect a rapid decimation of the super agents when MTN’s PSB goes live. I’m super curious about who Karl would anoint as the CEO of the bank though; I smell some ex-orange colored EDs who know all the tricks of the traditional banks and where dead bodies can be buried.
Disclosure: I bought some MTN shares and I’m rooting for them.
#3 Transfers become free. Financial inclusion becomes a reality
I don’t know if this is a prediction or a wish list because even if it doesn’t want to come to pass by itself, I’m going to devote part of my energy to it in 2022 to make it a self-fulfilling prophecy. And the premise is simple – make transfers below a certain amount free for everyone and you have a good chance of bringing financial inclusion to every Nigerian. CBN did this for ATMs and it was a success (bankers hated it though) and they may be tempted to do it next year too. The last time the cost of transfer went down to N10, the market jumped like drops of water inside the hot oil.
#4 Open banking goes live. API players are shaken off the tree
CBN has been cooking this for so long it’s almost burning on the stove. Finally, the standards are approved, released, and banks are mandated to implement them in 10 days 😁. Now, open banking is significantly more comprehensive, faster, and safer than the APIs being sold by my friends. And because only licensed players would be allowed, the market may shake some old API providers out of the market the way mobile internet killed business centers (if you were born after I graduated, please ask your uncle).
Disclosure: I’m a Trustee at Open Banking Nigeria and deeply connected to the regulatory efforts to spin up open APIs in Nigeria.
#5 FX goes the crypto way. P2P FX transactions power investment apps. CBN is upset
CBN is like the financial Thor of Nigeria, its hammer can smash the densest head. It came after crypto earlier in the year, but they survived and went underground where no hammers can touch them. The hammer then came after FX jugglers; just ask what happened to abokifx.com. But we need FX or how do I pay my subscriptions or buy Tesla shares? As the need for FX has refused to go away, some players may borrow a leaf from the p2p play that saved crypto in Nigeria. Could that, in one move, be the end of CBN’s control of retail FX in Nigeria? While some investment apps may have gotten an injunction to prevent CBN from locking their accounts up, trust them to throw a party if p2p can save their business model.
#6 NIN dethrones BVN as the ID of choice. CBN’s fear about data comes true
CBN is super worried about how and what fintechs are doing with BVN; anyone with half a brain would be worried at how easy BVN data can be gotten and misused. So, they got NIBSS to clamp down on BVN; unfortunately, there are no better alternatives for fintechs. Well, NIN came along with fresher data and wider coverage. The only problem is NIN being government property means data security and privacy may be poor. Soon, a major breach happens and DSS is called to fish out fintech founders.
#7 Lending becomes hot. Bigger banks jump in. Bigger banks get shocked.
Nigeria has a N74 trillion credit gap which is flashing eyes at prospective lenders. Even though many lenders have taken bad advantage of borrowers so much that even regulators have to weigh in, the demand for consumer and SME credit continues to surge. At least 5 top 10 banks, being the jealous type, would jump in without looking, but with disastrous consequences. They will fail because their loans would be packed like corporate bank credits.
Disclosure: I’m deeper into lending tech than the Marianna trench. And Sterling (Spectra), Access (QuickBucks), and FCMB (Credit Direct) have been doing consumer credit at scale before my last child was born.
#8 Market goes super-hot. New unicorns are born. Old players die
2021 was a year of growth for the fintech market and the conditions for a hot 2022 have been laid down – #1 the API business model gets proven (Mono and OnePipe raised $19m between themselves); #2 CBN released tons of licenses for new payments providers; #3 virtual account became a prime payments method, and #4 the folks that raised cash must show investors growth. What do you think the torrid combination of this means for next year? The market becomes competitive like crazy; fintechs would use dollars as weapons to snap talents and do marketing; larger and ballsy fintechs may start doing their APIs directly, bypassing Mono and others. When the smoke clears, the battlefield would be full of dead bodies. But I see the new players being victorious and crowned as unicorns. And the older players? Any of them born before 2015 is likely to slink into oblivion.
#9 Visa buys Interswitch
I’m predicting this for the third year in a row; maybe if I say it enough it would happen. Why do I think so? It just makes sense for various reasons; Naira is at all-time cheap and Interswitch fundamentals is anchored on Naira which makes them cheaper and because they are a grown-ass fintech, they can’t enjoy the 20x EBITDA multiple that smaller and younger fintechs use for their valuation. But then, they are a behemoth, they control 90%+ of ISO card traffic in Nigeria. And sweet old Ms. Visa owns 20% of them to start with. Meanwhile, Mastercard continues to kick Visa’s teeth with their Nigerian market dominance and even the previously smacked Verve is having a resurgence. Therefore, it makes sense for Visa to buy the Switch and just make Verve become Verve by Visa (Ve by Vi, how does that even sound?) But the kicker? Some of the long-term investors are itching to return funds to their limited partners so they would be more than happy to sell to Visa and bid goodbye.
#10 Mastercard buys Etranzact
This prediction is tied to number 9 like the way my daughters are tied to my surname. Once Visa buys the Switch, Mastercard would have to find their way out of there faster than a cat would slink off a hot plate. Of the bunch of payments processors hanging around Nigeria, only Etranzact remains a viable option for Mastercard as they have their servers in every place that’s called a bank. Most of the institutional owners would gladly receive a 3x premium.
Wondering what happened the previous years and the predictions? Read about my takes for 2018, 2019, 2020, and 2021.
Disclosure: I own some bits of Etranzact but if the multiple isn’t at least 5x, nobody should talk to me.