By Ouwaseun Adesanya
Nigeria, Africa’s largest economy, is home to over 220 million people, yet millions remain financially excluded. Despite technological advancements and the rise of fintech players like Moniepoint, Palmpay, Opay, and others, financial inclusion remains an unresolved challenge.
The question is: Is financial inclusion still relevant in Nigeria’s financial ecosystem, or has the focus shifted?
Nigeria’s Financial Reality: The Current Landscape
For years, financial inclusion in Nigeria was defined by efforts to onboard the unbanked and underbanked through traditional banking systems, microfinance banks, and mobile money operators. However, the reality has changed.
The Point of Sale (POS) revolution, driven by fintechs, has drastically altered how Nigerians transact. Today, Nigeria processes over $60 billion annually through POS channels, making it the most preferred payment method for businesses, traders, and everyday Nigerians.
Rather than fully embracing the cashless policy, many Nigerians have simply transitioned from cash-based transactions to POS-based cash withdrawals and transfers. This evolution raises a crucial question: Is the goal to reduce cash dependency or simply to provide easier access to cash?
Why Fintechs Are Winning the Inclusion Battle
Fintech companies like Opay, Moniepoint, and Palmpay have identified and filled the financial service gaps traditional banks struggled with. Here’s why they are leading:
1. Accessibility & Proximity: Traditional banks remain urban-centric, with long queues and bureaucratic onboarding processes. Fintechs leverage agent banking models, bringing financial services to every street corner in Nigeria.
2. Faster Transactions & Simplified Processes: With intuitive apps and seamless transaction capabilities, fintechs have redefined convenience. Unlike banks that often require extensive KYC, fintechs have simplified the onboarding process, making it easy for even the most skeptical Nigerians to join.
3. POS as the Preferred Channel: With over 2 million active POS terminals, fintechled agent banking has made financial transactions easier than ever. Market traders, transport operators, and even professionals prefer POS terminals to banks for deposits, withdrawals, and payments due to speed and efficiency.
4. Incentives & Financial Benefits: Unlike banks, which focus heavily on fees and account maintenance charges, fintechs reward users through cashback, referral bonuses, and zero transfer fees—a major attraction for everyday Nigerians.
Market Intelligence: Understanding Nigeria’s Transaction Preferences
To craft a solution-driven approach, let’s analyze Nigeria’s transaction preferences based on available data:
Transaction
Type Volume
(%) Leading Channel Why Nigerians Prefer It
POS
Transactions 55% Fintech Agents (Moniepoint,
Opay, Palmpay) Fast, available, and widely accessible
Mobile
Transfers 25% Fintech Apps (Kuda, Palmpay,
Opay) Instant, low cost,
convenient
Bank Transfers 12% Commercial Banks Reliable but slow and
costly
USSD
Transactions 5% Banks & Telcos Works without the internet but expensive
ATM
Withdrawals 3% Banks & Fintechs Limited cash availability & long queues
Regulatory & Economic Challenges in Financial Inclusion
Despite the fintech boom, there are pressing regulatory and economic hurdles that threaten progress:
• License Cost & Regulation Tightening: The Central Bank of Nigeria (CBN) is reviewing capital requirements for MMOs and fintechs, which may force smaller players out of business. A stricter licensing regime may hinder innovation.
• Economic Volatility & Inflation: With rising inflation and currency fluctuations, transaction fees and operational costs could increase, discouraging financial service adoption.
• Interoperability & Collaboration: Many banks still see fintechs as competitors rather than partners, making integration difficult. Instead of rivalry, banks must scale by collaborating with fintechs to improve service delivery.
• Cybersecurity & Fraud Risks: With the rapid adoption of digital transactions, fraud cases have surged, leading to trust issues among users. Strengthening cybersecurity measures is crucial.
What Should Be on Stakeholders’ Burner?
As we reflect on whether financial inclusion is still relevant in Nigeria’s financial ecosystem, stakeholders must take decisive action:
1. Banks & Fintechs Must Partner: Rather than compete, banks and fintechs should leverage their respective strengths to drive scalable financial inclusion models.
2. CBN Should Balance Regulation & Growth: Overregulation can stifle innovation. Policies should be designed to support fintech scalability while protecting consumers.
3. Expand Beyond Payments: Fintechs should explore credit accessibility, savings incentives, and wealth management solutions to deepen financial inclusion.
4. Financial Literacy & Trust Building: Many Nigerians still prefer cash due to trust issues. A nationwide campaign on the benefits of digital finance is needed.
5. Reduce USSD & Transaction Charges: High fees discourage adoption. Government intervention may be necessary to reduce transaction costs for mobile banking and POS services.
Final Thought: Is Financial Inclusion Still a Priority?
The fintech revolution has expanded access, but financial inclusion must evolve beyond payments. The focus should shift towards wealth creation, micro-credit, insurance, and digital savings adoption. Stakeholders must redefine financial inclusion goals to match the realities of Nigeria’s evolving financial ecosystem.
So, what should be on the burner of financial industry players to truly advance financial inclusion in Nigeria? The conversation is open.
Oluwaseun Adesanya (GS)
Fintech Guru
Oluwaseun.adesanya@gmail.com
07013990127