Tension In The Air As De-Licensed Nigerian Neobank Halts Services
There is some apprehension in the air as one of Nigeria’s latterday neobanks, Eyowo, faces a curveball that has put it in a tough spot.
Eyowo is among 46 other financial institutions revealed to have been stripped of their license in an initial list published by the Central Bank of Nigeria (CBN) on Tuesday, May 23. This was part of a license revocation exercise that further impacted another 132 Microfinance Banks, Finance Companies, and Mortgage Banks, as seen in subsequent lists.
One of the more recognisable brands in a sea of obscure names, Eyowo launched in 2019 as a digital-only bank keen to tap into a growing demand for seamless app-based banking services among Nigeria’s youth disillusioned by the malaise at traditional, brick-and-mortar lenders. Developed by local software builder Softcom, Eyowo claims to have attracted 3 million customers so far, who use its unified financial tools to pay, receive, budget, and save money. But the recent action by the CBN has thrown a spanner in the works.
Tensions are high as customers are currently unable to transact on or move deposits from Eyowo following the news that its license has been revoked, and there’s a bit of worry about the optics of the situation for Nigeria’s growing digital banking landscape which has, in recent years, made progress in breaking trust barriers and pulling customers from traditional banks.
Common services like sending and receiving money have been halted, and there are concerns that Eyowo may have taken this step, not necessarily because it had been blocked from operating, but to buy time and prevent a bank run—a situation where a bank’s depositors scramble to take out all their money at the same time thus causing the bank to fold—while working to salvage its licensing status with the CBN.
“…we are actively working with the Central Bank of Nigeria to resolve all pending issues and put our customers at ease,” the company said in a statement released Wednesday. “Over the next few hours, you will experience challenges sending and receiving money with Eyowo. This may take up to 24-72 hours to completely resolve.”
Thank you for your understanding. 🙏🏾 pic.twitter.com/ED553wimes
— Eyowo (@eyowo) May 24, 2023
Unsurprisingly, this hasn’t gone down well with users, some of whom have taken to social media to register their displeasure at the situation, despite Eyowo’s reassurances that the CBN directive does not jeopardise their deposits. It’s unclear what steps are being taken to fix the problem, nor is it certain when users can regain access to services or whether Eyowo will manage to get out from under the penal arm of the CBN.
The CBN governor, Godwin Emefiele, announced the cancellation of the licenses in a notification posted on the website of the apex bank, declaring that the banks had violated the revised regulatory and supervisory guidelines for microfinance banks in Nigeria and the Banks and Other Financial Institutions Act (BOFIA), 2020
According to the regulator, the institutions affected had been found to be inactive, insolvent, failed to submit returns, shut down, or stopped conducting banking business as they were licensed for longer than six months.
Featured Image Credits: THISDAY
