Is Squad GTCO’s final infinity stone?

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Ten years ago, there would have been little talk of Nigeria’s banks expanding outside of their core banking services. They had millions of customers, retained trillions in customer deposits and didn’t face a lot of competition. But the sand is shifting, and one big sign of that is the launch of Squad, the much-awaited payments startup from GTCO. 

There’s been no big secret that GTCO had a payment play in the works. With Nigeria’s banking sector, at a crossroads, competition is stiff. First came the great unbundling, with startups chipping away at parts of banking services. PiggyVest and Cowrywise allow you save money and earn a better interest rates than most banks offer. A number of digital lenders allow you take loans or even finance asset acquisition. 

Yet, away from unbundling, there’s even more competition in the “bundled” banking sector as well. It has now left legacy banks with one option; expand beyond banking and start thinking about the future. That future has led banks like GTCO to adopt holding company structures and break away from restrictive CBN rules that banks should only be active in core banking services. As a holding company, GTCO now has an asset management company and a pension management company. Yet, the true crown jewel was always going to be its payment company. 

In March 2020, Segun Agbaje, GTCO’s Group CEO told analysts: “[Payments] is a space we’re coming into, so we will have to look at the likes of Paystack as bigger than us on the day we start, as knowing more than us, but I promise you we will bridge that gap very quickly.”

It was a pretty bold statement, embodying the sort of big bet that this is for GTCO. Yet, Agbaje’s belief about his bank’s payment ambitions were met with snickers from operators within the startup space. One common argument from the skeptics is that banks, being legacy institutions don’t have the nimbleness or flexibility required for all startups to succeed. Today, that argument is neither here nor there and there’s now a living, breathing product and service we can judge.

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What’s under the hood at Squad? 

Squad’s website says it the company is more than payment, promising that it “provides the best tools to help your business grow.” That said, the meat of it is that Squad allows business owners to accept payments in a process that it claims will take less than fifteen minutes. If you run a business online, that will mean that you can set up a payment link for your website and allow people pay using that link. 

For the businesses with a physical presence, there’s what it calls “Squad POS,” a way of turning your phone into a point of sale terminal and allowing you to take payments with debit cards. There’s yet another interesting option of creating a dedicated USSD code for your business; in a country where USSD payments  are the second most popular way of sending money, it feels like there is something here. I saw a bit of Squad’s special USSD codes on display at the company’s food and drink festival last month and it felt like an important beta test for the feature. There’s very little doubt that Squad sounds interesting when you break it down by its features, but what may really be brilliant about this new startup is the sum of its whole. 

What’s the sum of the whole? 

Like Thanos wielding the infinity gauntlet, one crucial infinity stone for squad is that it helps you set up online storefronts. This storefront means that if you’re setting up a business online, you can create a store where people can find and pay for your products without adding on any real costs. 

The Squad ecosystem looks something like this: conceive an idea to start selling shoes online, open social media pages for your business, set up a digital storefront with Squad, create a virtual account number for your business, and access three to four interesting ways to collect payments from your customers. If you’re an even bigger business with a website of your own hosted on WordPress, you can still integrate the Squad payment link. 

And just to be sure it all checks out, I created an account pretty quickly and took a spin on it. So far, it looks pretty compelling and may just be GTCO’s answer to business banking, which will mean extra competition for startups like Prospa and Brass. 

One edge GTCO may enjoy is that their food and drink festival and their fashion fair has given them access to hundreds of small businesses. It means that distribution is likely something they don’t have to think too much about. 

Yet, the most critical metric it will come down to is this: will the payments go through and be reliable 99% of the time? That reliability will be one of the most critical metrics, especially at a time when banks struggle with retaining key members of their technology department. 

In the end, it’s still early days and it’s too premature to make broad judgments about Squad becoming the dominant market player; yet, it’s clear that this is GTCO’s focus for the next few years–I wouldn’t bet against it.