Who owns the Customer? Perspectives to Tackle FSP Partnership Problems

Partnerships often breakdown due to disagreements over customer ownership. How can FSPs sidestep this obstacle?

Sustainable and Inclusive DFS
3 min readFeb 21, 2022

Creating and delivering innovative products and solutions to customers at affordable prices often compels financial service providers (FSPs) to seek out partnerships with other ecosystem operators. Such partnerships enable FSPs to share risk, combine resources and create synergies that would enhance their collective outcomes.

However, there’s a dearth of partnerships in our ecosystem due to several factors (highlighted in our 2021 State of Market Report). They include distrust, goals misalignment, limited experience engaging with other ecosystem operators, conflicts of interest, among several others.

We took the conversation further at a Business leaders’ Dialogue where industry stakeholders convened to discuss some of these factors and brainstorm solutions. Below are some interesting highlights:

Who owns the customer?

Customer ownership is when a direct relationship exists between the FSP and the customer. Defining who owns the customer is perhaps the biggest roadblock intending partners face. Partnership negotiations often break down due to the fear of ceding customer ownership to partners and thereby losing revenue and market share..

Defining customer ownership is sometimes difficult especially where one partner wants exclusive ownership even though all partners are jointly creating value. In relationships where one partner intermediates, tussles over customers could also ensue.

These conversations aren’t getting easier especially as financial intermediation continues to evolve, from traditional bank branches to remote banking, peer to peer and so on.

However, the concept of “owning customers” may not be the most effective strategy to optimise partnerships.

Even when operators agree to co-own customers, negotiations eventually break down because one party attempts to eke out as much rewards as possible from the partnership (commissions, profit sharing, etc) at the expense of other partners, tipping the scales unfairly.

The truth remains, building enduring partnerships requires a win-win mentality.

Targeting the same customers

Intense disputes over customer ownership ensue because providers are largely competing to serve the same set of consumers, most of whom are already banked and have several financial accounts. This is also why the pace of financial inclusion is slow.

But zoom out to consider the bigger picture: the market is full of opportunities as evidenced by the 38.1 million unbanked and 14.4 million underbanked Nigerians out there. These are Nigerians daily transacting with cash and using family, friends and informal providers to meet their financial service needs. When will the focus shift towards serving these other segments as well?

Any operator or coalition of operators that can crack the code and break into these excluded segments will have the first mover advantage. It is a high effort — high reward scenario which is why shared risk and combined resources offers a sustainable approach to bridging the inclusion gap.

Paradigm shift: Users, not Customers

Here’s a crazy idea: FSPs are service providers and should transit beyond “owning” customers to ensuring their products and services are consumed by as many users as possible. The emergence of the platform economy has shifted the power dynamic as financial services moves from vertically integrated value chains to horizontally layered value stacks.

This shifts the focus from “owning” the customer to creating and delivering compelling value to as many users as possible, on as many platforms as possible. This new paradigm opens the door to open banking all its attendant benefits.

As competition in the financial service industry intensifies, customer loyalty will wither as Nigerians seek out providers who can meet their needs at affordable costs. Because, let’s face it, users are only interested in having their problems solved and will actively seek out the best products and solutions. Eventually, the winners would be FSPs able to position themselves strategically along the customer value chain, delivering the most value to as many users as possible.

In Conclusion

The business of financial services is not a zero sum game. There’s always value to be created and value to be added when it comes to meeting customer needs and addressing pain points. And with millions of Nigerians still living day to day without financial access, opportunities abound for brave and innovative FSPs willing to join forces with others to venture into the frontiers where competition is not so fierce.



Sustainable and Inclusive DFS

We work with government, financial services regulators, donors and the private sector to drive financial inclusion in Nigeria through #research #advocacy