Yes, OPay is a digital bank in Nigeria, but not a commercial bank. Like Kudabank, some expert call it a Neobank and an online bank. OPay is a mobile money payment platform that offers a wide range of financial services including payments, transfers, savings, loans and other essential services like incentive programmes, but it is not a bank like Kuda Bank.
Kuda Bank is a fully licensed digital bank that provides banking services like free transfers, physical & virtual debit cards, loans, and savings & investment options. Although, OPay also offers these banking services but Kuda Bank's main advantage is the ability to invest in shares and make micro-savings plans.
OPay is one of the most popular mobile money apps in Nigeria that's offering a wide range of financial services, but it is not a bank like Kuda Bank. Here are the key differences between OPay and other digital banking platforms:
PalmPay is another typical example of and alternative fintech apps like to OPay. The mobile money app is redefining the payments experience for consumers and businesses in Africa by making financial services more accessible and affordable.
Like Kudabank, Chipper Cash is another digital bank and Neobank in Nigeria and other African countries. Chipper Cash is an African cross-border payments company that enables payments and financial inclusivity across the continent. The main advantages of Chipper Cash over Kuda Bank, OPay and PalmPay is that the company focus on cross border payment and virtual USD card services.
The key similarities between OPay and other digital banking platforms like Kuda and Chipper Cash are:
- They all aim to provide financial services in a seamless, attractive and rewarding way to both the unbanked and banked population.
- Most gives customers free transfers, physical/plastic ATM card & virtual debit cards, savings & investing tools and loans & services features.
- These payment apps are more focused on driving financial inclusion using leveraged technology.
However, the main differences between them are that licensed digital banks like Kuda provide a maximum range of banking services, while OPay and other fintech platforms are more focused on payments and transactions.
But overall, they are all working to disrupt traditional banking in Nigeria by making financial services more easily accessible through mobile apps and online platforms.
About OPay
OPay was founded in 2018 by Opera Group and Software, the company behind the Opera web browser. The company incepted as a mobile payment platform aimed at providing financial services to the unbanked, underbanked and banked populations in Nigeria.
The fintech was licensed by the Central Bank of Nigeria (CBN). It is also insured by the Nigeria Deposit Insurance Corporation (NDIC) like other commercial banks in Nigeria, making it more like a digital bank.
OPay Bank services include;
Mobile bankingSavings accountsMoney transfersBill paymentsLoan servicesInvestments and SavingsUSSD BankingHence, we can call OPay a Bank. However, it operates primarily through a mobile app and have no physical location except for the offices and headquarters where banking system operations and management are being managed.
As of 2023, OPay boasts over tens of millions of users, agents and merchants in Nigeria. It aims to serve one billion (1bln) users and 10 million merchants by 2031. The digital bank has also formed alliances with various financial institutions and service providers to expand its offerings. The company has also explored expansion into other African countries like Egypt, Kenya and Ghana.
It's also noteworthy to inform you that OPay has introduced several innovative financial products and services, such as OWealth for investment and OFood for food delivery, enhancing its ecosystem and providing more value to its users. However, many of these products are no longer functioning in every regions of Nigeria.
The Differences between a digital bank and a commercial bank
Digital banks and commercial banks represent two distinct primary approaches to banking. They are most differentiated by their operational models and customer engagement strategies.
Digital banks, such as Kuda Bank, ALAT and Hydrogen are often referred to as Neobanks because they hold a microfinance bank license and operate exclusively online without physical branches.
Digital Banks leverage innovated technologies (Innotechs) to provide a unique and streamlined banking experience which allows their customers to carryout transactions via mobile apps and online through their dedicated websites.
The digital-first approach allows digital Banks/Neobank to offer lower fees and competitive interest rates due to reduced overhead costs associated with maintaining physical locations.
In contrast, commercial banks are still maintaining traditional structure with all their physical branches across the nation. The make them to provide a wide range of services including savings accounts, loans, and investment products, often with a more personalized service experience to their customers.
One of the significant differences lies in the user experience. Digital banks are designed for convenience, speed and low transaction decline rate. They also often features user-friendly interfaces that encourage to tech-lover customers.
In addition, digital banks also typically provide instant account setup, real-time transaction notifications, and 24/7 customer support through chatbots or online platforms.
On the other hand, commercial banks may offer a broader benefits of financial products and services, including mortgages and insurance, but their digital banking interfaces can sometimes feel outdated due to legacy systems. This can eventually lead to longer processing times for transactions, high transaction decline rate and a less efficient overall experience compared to the agile services offered by digital banks.
Security and trust are also mportant factors that's used in differentiating between the two bank types. Commercial banks, with their long-established presence, often inspire greater confidence among customers, especially older demographics who may prefer face-to-face interactions. Digital banks, on the other hand, are subject to the same regulatory standards and security measures as commercial banks to ensure customer data and funds are at safe place.
As the banking landscape continues to grow in Nigeria, many traditional/commercial banks are adapting new technology to enhance their digital footprint and offerings. Many of them are already engaging in a hybrid model that combines the benefits of both digital and conventional banking, helping them to solve and provide for various customers' needs and preferences.
In a nutshell, is OPay a Bank in Nigeria?
While OPay provides many banking-like services, it operates as a financial technology company, not a licensed commercial bank. Banking services are provided through its licencing and regulatory approvals with regulators like CBN, NDIC and NIBSS and lending companies like BlueRIDGE MFB for offering Loan service.
So in summary, among others, OPay is a very well-known and significantly growing mobile money/payment app in Nigeria. It's most recognized by almost every household in the country, however, it is still not a bank. OPAY works with bank regulators and other financial technology companies to provide a vast of digital financial solutions to consumers, merchants, and its agency banking (POS Agents).
