The play by the banks to become holding companies, at the surface, makes a whole lot of sense. The market is quite unforgiving with the valuation of banks – they are treated as legacy and there is nothing exoteric about what a bank can do – so the valuation is harsh.

Startups, on the other hand, are a pandora's box: it could turn out to be a banger or a banger; whichever banger you want to throw.

Hive out payments out of a typical bank, the valuation of the existing mothership wouldn’t budge but the new PayCo may become a unicorn.

Well, that’s what the theory looks like. Until you discover that what makes startups successful has nothing to do with the structure but more with the DNA of those running these companies.

Do the Nigerian banks’ leaderships have the DNA to run these companies like startups? My guess is just as good as yours – nope. So most of them will struggle to get what they are looking for:

They won’t be able to attract or hold smart talent

They won’t know how to create a creative and enduring culture that drives ownership

They won’t be able to compensate well, especially young but fast-growing talent

They won’t be able to make decisions quickly

They won’t be able to take risks

They won’t know how to partner

They would be overburdened by board members that don’t know what the business is about

And they would be regulated to death

Expand full comment

You make strong points. Personally, I only see them stabilising the field for current players.

The tumult and the uncertainty plaguing the industry will be lesser and made calmed a bit with legacy banks getting involved - they can force more change and ease dramatics with CBN.

The party is about get a new turnover, let's see dance steps they will shake off.

Expand full comment