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The boundaries of financial services are becoming harder to draw. A bank no longer always looks like a bank. A telecommunications company no longer only provides calls and connectivity. Increasingly, the same platform that connects a customer to a mobile network may also allow that customer to store value, make payments, access credit and transact across borders.
That shift is especially visible in Africa, where mobile money has changed how millions interact with financial services. Reuters recently reported that MTN Group is exploring banking licences in selected African markets to expand lending from its own balance sheet. MTN’s CEO, Ralph Mupita, linked that possibility to markets with large customer bases and significant wallet balances, while indicating that MTN would not abandon existing banking partnerships.
When a platform starts to look like a bank
This is commercially significant, but it is also a regulatory development. The question is not simply whether a telco wants to become a bank. The more important question is what happens when a non-bank platform begins performing functions closer to the heart of banking, payments and credit.
In South Africa, that question must be answered by reference to function rather than branding. A telecommunications company does not become a bank merely because it offers financial products through partners. However, the position changes materially where a business begins accepting deposits from the public as a regular feature and using those funds to grant loans or finance its own activities. The Banks Act, 1990 defines the “business of a bank” to include accepting deposits from the general public as a regular feature, soliciting deposits, and using deposit money for lending, investment or financing.
That is why lending from a platform’s own balance sheet matters. Partnership-based lending and deposit-taking are not the same regulatory proposition. A telco that introduces customers to a bank partner or facilitates a wallet may fall within one set of regulatory considerations. A platform that takes deposits and uses its own balance sheet to extend credit raises prudential, conduct, liquidity, capital, governance and resolution questions more commonly associated with banking.
The card credential is unified – the money behind it is not
The same blurring of lines can be seen in card payments. Visa, _able and Onafriq recently announced a partnership to support Visa Flex Credential across Central and Eastern Europe, the Middle East and Africa. The collaboration will help financial institutions activate credit experiences alongside existing eligible debit and prepaid credentials, with Onafriq supporting payment processing and connecting participating institutions to its pan-African payments infrastructure.
At first glance, that may sound like a product enhancement. In reality, it points to a deeper change in payments architecture. Visa Flex Credential allows multiple funding sources to sit behind a single card credential, potentially enabling a customer to access debit, prepaid or credit functionality through one credential.
The payment credential may be unified, but the money behind it is not. That distinction is critical. Debit generally involves spending available funds. Prepaid value raises questions around stored value and safeguarding. Credit involves extending a facility that must be underwritten, disclosed and managed under applicable credit regulation. Technology may make those funding sources appear seamless, but regulation must still recognise the legal nature and risk of each.
Credit through the back door
In South Africa, consumer credit remains subject to the National Credit Act, 2005. A credit provider must take reasonable steps to assess a proposed consumer’s understanding of the risks and costs, debt repayment history, and existing financial means before entering into a credit agreement. If credit is made available through a credential already used for debit or prepaid transactions, issues of consent, disclosure, affordability and transaction-level customer choice become especially important.
Africa is not importing – it is building
This is where the regulatory conversation becomes more interesting than the product announcement. African markets are not merely importing payment models developed elsewhere. They are building financial ecosystems around how people actually move, store, borrow and spend money. In many markets, the mobile phone became the access point before the bank branch did. The wallet became the account. The network became the payment rail. Lending became an additional layer.
South Africa’s own payments reform is moving in a similar direction. The South African Reserve Bank’s Payments Ecosystem Modernisation Programme aims to enable fast, simple, inclusive and secure digital payments, contemplating a broader range of payment service providers (including banks, fintechs and non-bank entities_ participating in the domestic payment environment. It signals an activity-based regulatory model that may allow non-banks to participate in specific payment activities, including issuing e-money and payment acceptance, subject to appropriate authorisation.
That approach matters because it avoids treating institutions as fixed categories. A bank can provide technology. A telco can provide financial services. A fintech can facilitate payments. A retailer can support cash-in and cash-out. The regulatory question is not what the entity calls itself, but what activity it performs and what risk that activity creates.
For businesses, the opportunity is clear. Platform-based financial services can widen access to credit, reduce friction in payments, leverage existing customer relationships and support financial inclusion. A customer with a prepaid or debit product may not need an entirely new card to access appropriately underwritten credit. A mobile money user may not need a traditional branch relationship to participate in the formal financial system.
The risk is equally clear. As the customer journey becomes simpler, the regulatory architecture becomes more complex. Firms need to understand who holds the customer’s funds, who provides the credit, who performs affordability assessments, who owns the customer relationship, who carries operational risk, and who is accountable when something goes wrong.
Looking ahead
The next phase of African payments will not be defined only by new technology. It will be defined by whether the law can keep pace with financial services that no longer fit traditional categories. The real question may not be when a telco becomes a bank, but whether our regulatory frameworks are sufficiently clear, flexible and activity-based to regulate platforms that increasingly do what banks, payment institutions and credit providers have historically done separately.
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Read the original publication at ENS
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