E-Financial
Banking Utility Model Key Driver of Customer-Facing Innovation- IDC
IDC Financial Insights believes that a “Banking Utility Model” would allow banks to train their focus on customer-facing innovations while keeping the commoditized parts of their business as low cost and efficient as possible.
The key tenet of the utility model is an agreement between banks to pool their resources for a particular line of business (LOB), setting up a dedicated entity to manage the processing. Different areas can call for a different degree of mutualization, whether just in the back or middle office, or covering specific end-to-end processes.
The rationale for the utility model includes:
Cost savings. By sharing development, infrastructure, and operational costs across an industry, individual banks can cut duplication and save money. A utility can benefit from specialization, economies of scale, and potentially also monopsony, as the only buyer of certain services.
Investment efficiencies. By combining investment dollars in a single entity, that entity will have higher purchasing power than individual banks. Capital-intensive projects are more viable when an individual bank only has to provide part of the capital, and share only part of the risk.
Consistent delivery. A utility can specialize in perfecting its narrow remit, while banks have a broader focus. Having a single utility across an industry for a particular process can also serve to standardize customer expectations, with industry standards and benchmarks supporting the utility.
Innovation. Banks can focus on innovation in their profit centers, and leave utilities to attend to their cost centers. In turn, the utilities can become more innovative since the cost of failure is shared among banks.
Lawrence Freeborn, senior research analyst, IDC Financial Insights said: “The banking industry in Europe is beset by challenges from many directions. Regulations such as the Dodd-Frank Act and Basel III will ensure that compliance remains a headache for banks, at the same time that pressure is building from new entrants to the market.
“A new generation of start-up banks in countries such as the U.K., plus technology firms like Apple and retailers like Marks & Spencer, are encroaching on the banking space. They are forcing banks to cut costs and innovate in order to stay competitive and indeed relevant in the emerging landscape, which is increasingly centered around mobility, analytics, and personalized banking services. This industrial utility model could be the part of the answer to all these pressures.”
The Central Bank of Nigeria (CBN) has slammed a ₦250 million fine on Paystack for operating Zap, its peer-to-peer payment app, as a wallet in breach of its regulatory approval.
The apex bank flagged Zap as a deposit-taking product, a function reserved exclusively for institutions with microfinance or banking licences, according to a report by TechCabal.
Launched in March, Zap allows users to send and receive money, positioning itself as a consumer-facing digital wallet.
However, Paystack only holds a switching and processing licence, which permits it to facilitate transactions but not to hold customer funds. This regulatory limitation is at the heart of the CBN’s sanction, sources familiar with the matter said.
“Paystack is working closely with the regulator as they further review Zap, and out of respect for the process, we won’t be making any public comments at this time,” a company spokesperson said.
The penalty comes amid a legal dispute between Paystack and Zap Africa, a Nigerian crypto startup, which has accused the fintech of trademark infringement.
In Nigeria’s highly regulated financial services space, digital wallets are considered deposit-taking entities, and offering such services without the requisite licence raises compliance concerns for the regulator.
Although Zap reportedly does not directly hold customer funds, it operates in partnership with Titan Trust Bank, which is authorised to accept deposits.
This is Paystack’s most significant publicly disclosed regulatory sanction since it received CBN approval in 2016. It reveals the growing scrutiny facing fintech firms as they transition from enterprise-focused offerings to consumer-facing financial services.
Guaranty Trust Bank (GTBank) has announced an increase in its SMS transaction alert fee from ₦4 to ₦6 per message, effective May 1, 2025. The bank cited a recent rise in telecommunication tariffs by service providers as the reason for the adjustment.
In a message to customers, GTBank explained that SMS alerts sent to international phone numbers would attract higher charges due to varying telecom costs. The bank emphasized the importance of transaction alerts in helping customers monitor account activity
Customers who no longer wish to receive SMS alerts have the option to update their alert preferences by submitting a form available on the bank’s website via email. This move allows customers to manage their notification preferences according to their needs.
The fee increase affects GTBank customers, who will now be charged ₦6 per SMS alert for transactions
Union Bank of Nigeria Plc is facing a major financial scandal after hackers reportedly siphoned N9.3 billion from multiple customer accounts.
The breach, which occurred on March 23, 2025, has led to an urgent legal battle as the bank seeks to freeze accounts suspected of receiving the stolen funds.
Court filings reveal that the cybercriminals exploited a critical system glitch, discreetly transferring the money in small amounts across 54 financial institutions to evade detection.
Oluwasegun Falola, Union Bank’s Head of E-Fraud Investigations, confirmed that tracking the transactions has been challenging due to their fragmented nature.
Acting swiftly, the bank filed a lawsuit (FHC/L/CS/629/2025) at the Federal High Court in Lagos, requesting an emergency order to halt further withdrawals. On April 2, 2025, the bank’s legal team, led by A. Adedoyin-Adeniyi, informed the court that the stolen funds were still being actively moved—suggesting an ongoing laundering operation.
In response, Justice Deinde Dipeolu granted a Post No Debit (PND) order, freezing all implicated accounts pending further investigation.
This crisis comes just 15 months after the Central Bank of Nigeria (CBN) dissolved Union Bank’s former board over governance failures. Under the leadership of MD Yetunde Oni, the bank now faces intense scrutiny as customers demand accountability.
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