Guaranty Trust Bank, or Guaranty Trust Holding Company Plc, as it is now known, has always been known for innovation.
The youth-friendly and focused bank recently unveiled its newest offering, Squad, a payment processing platform that aims to help small businesses collect payments.
Squad by GTCO is coming into the Fintech market scene at a time when it appears Nigerians already have a plethora of options when it comes to payment processors.
Since 2007, when the Central Bank of Nigeria (CBN) launched the Payment Systems Vision 2020, which identified a number of pointers that can help make the payment system infrastructure more resilient and encourage the adoption and usage of electronic payment methods, the country has continued on an upward trajectory in its bid to make digital payments easy, deepen financial inclusion and generally turn Nigeria into a truly “cashless economy”. It has done this by reducing the amount of physical cash in circulation and encouraging the adoption of electronic-based transactions.
Despite the recorded progress in this regard, the country still has a long way to go.
This is because mobile payment adoption is still low, and this in turn translates to an overall lag in the entire ecosystem. Despite the plethora of payment processing startups that abound in the country, the situation is still far from being easy and seamless.
With a smartphone penetration of 56%, internet penetration rate standing at 51.0 percent as of 2021 as reported by Dataportal and corroborated by Statista, and with only 3% of the population having credit cards, this translates to mean that over half of Nigerian adults currently lack access to financial services.
The implication of this data is that, even though the internet allows business owners to access a wide market and expand the scope of their offerings, receiving payments remains a big hassle for many.
It is in the light of the above that GTBank’s newly launched Squad appears set to and may well be positioned to give additional value to its potential customers, especially when compared to what presently exists in the industry from other players.
One issue that has been realised is that with other fintechs who have hitherto been operating in the payment processing sector, users, that is, businesses, still needed to transact and rely on the traditional banks in the area of payment fulfilment.
What these fintech companies basically had going was that agreements were reached with the regular banks and they (fintech companies) simply acted as an intermediary between merchants and the banks.
While they linked up with the customer on the front end, fintech companies, via switching gateways, were able to interact with the customer’s banks, retrieving payments and subsequently depositing the same in the merchant’s own account. For being the interface and ‘engine’ through which these payments were initiated and consummated, they charged a processing fee which basically is their own cut in the entire scheme of things.
All this, it appears, may change with the introduction of Squad, which is touted as an Integrated Payment Solution that is set to revolutionise digital payments not just in Nigeria but in Africa as a whole.
Following a 2010 regulation directive from the Central Bank of Nigeria (CBN) which mandated banks to divest from their non-banking subsidiaries or restructure as a holding company should they prefer to hold onto these subsidiaries, GTBank moved to restructure into a holdco, as did other banks like Acces Bank, which is the most recent. First Bank also restructured under a holding company in 2012, while Stanbic IBTC and FCMB also followed suit.
The restructuring, according to the bank’s CEO, now CEO/Mng Dir at Guaranty Trust Holding Co PLC., Segun Agbaje, will allow the bank to develop other businesses beyond its core banking business.
Apparently, the bank had seen the handwriting on the wall and decided to also move fast. This is because, according to consulting firm Frost & Sullivan, Nigerian fintech revenues will grow from $153.1 million in 2017 to $543.3 million by this year. What this essentially means is that about 30% of banking income may be at risk.
Before the directive, GTBank had a number of non-banking services it had launched. It had GTB Asset Management, which offered capital market services, and GT Assurance, its insurance arm. It has since sold off these subsidiaries.
Now, its aim is to play big in the burgeoning fintech space by developing its own fintech products and building out its payments and fintech arms.
Speaking during an earnings call in 2020, Segun Agbaje had said, “About 10 years ago, we made a decision then looking at the operating environment, that we were going to shed all our subsidiaries and become completely bank-focused,”
“Everything we have seen over the last 2, 3 years, has told us that it’s time to have a bit of a rethink.”
As it turns out, one of the results of the rethink is what is now known as Squad, GTCo’s attempt to ruffle the waters within the fintech space.
Payment processing has before now been the exclusive preserve of fintech companies, with the likes of Interswitch, eTranzact, and Systemspecs (remita) leading the way, and giving an inroad to others like Flutterwave, Paystack, and a host of other new entrants.
According to the company, Squad is a one-stop payment solution for every business in Africa. It is a single product that leverages technology to bring about a user experience that makes satisfaction an everyday experience. It is essentially designed for micro and small business owners, such as digital sellers, online vendors, tech-talents, and even big enterprises.
Indeed, payment is the next frontier, as even Agbaje notes that about 30% of banking revenue comes from the payment space and is expected to grow between $20 billion and $40 billion in the next few years, and fintechs, as it stands, are already eating into this big pie.
And GTBank has its eyes set on this and is going all out to take a good share of this big pie.
The question, however, is how well this new initiative from the orange brand really is positioned to square up to the plethora of fintech brands that litter the Nigerian payment landscape.
Wole Oluyemi, a senior financial analyst and strategy advisor, believes that the brand indeed has all the makings of a feather ruffler.
Of Squad, he said, “With Squad, GTB is certainly out to square up to other fintech startups in Nigeria while leveraging on the technology infrastructure and customer reach of the bank. We might be on our way to seeing a truly profitable unicorn in Nigeria’s fintech space.”
As it stands, the company appears to have done its homework well with the introduction of Squad which comes with value-added services like bulk payment collection, automated reconciliation of offline and online payments, fraud prevention tools, and instant settlement, among others.
Squad’s goal is to empower every business and enable them to receive payments from their customers, be it online or offline, which one must acknowledge shows thoughtfulness given the peculiarity of the Nigerian terrain. Another game changer it offers is the Soft POS feature. This allows merchants to directly accept payments on their phone or device without the need for any additional hardware or software.
Backed by the fact that it is directly connected to the bank’s infrastructure, merchants should be enjoying seamless reconciliation with increased success in payments.
With Squad, GTB is certainly out to square up to fintechs and give them a run for their money while giving merchants a new experience in payment.
