The festive season has highlighted a significant shift in Nigeria’s financial landscape, with fintech platforms rising as preferred alternatives amidst growing dissatisfaction with traditional banks.
Challenges such as delayed transactions, high charges, and system downtimes left many bank customers frustrated during the high-transaction Yuletide period.
A disgruntled customer, who chose to remain anonymous, shared their frustration:
“It’s hard to imagine Nigeria becoming a reliable country anytime soon. Every sector is in chaos. I made a simple £600 transfer from my bank account to my UK Revolut account, and six days later, the money hasn’t arrived. Yet, the bank has already deducted over £30 in charges. They prioritize deductions over efficiency and tell stories when you call to rectify issues.”
Similar sentiments were echoed by diaspora Nigerian Ikhide R. Ikheoa, who commented on X (formerly Twitter):
“No one seems to study how technology is redefining our lives. While visiting Nigeria, I realised I no longer need my Nigerian bank account. Thanks to apps like TransferWise and Remitly, I could transfer money almost instantly from my American account. Why deal with outdated banking systems demanding irrelevant documents like marriage certificates?”
Amidst the chaos, fintech platforms like Opay, Palmpay and Moniepoint are gaining traction by offering innovative and customer-friendly services. For instance, Opay achieved a commendable 84.1 experience score, providing real-time updates on network statuses and transaction progress.
The introduction of the Electronic Money Transfer Levy (EMTL) in December 2024, which mandates a N50 charge on transactions of N10,000 and above, has further bolstered the appeal of fintech platforms.
The banking public believes that their transparency and efficiency make them an attractive alternative for Nigerians seeking reliable financial solutions during the festive season.
Driven by economic pressures, technological advancements, and policy changes, Nigeria’s adoption of digital payments has soared. Data from the Nigeria Inter-Bank Settlement Systems (NIBSS) revealed that electronic channels processed a record-breaking N89.5 trillion in transactions in July 2024, an 89 percent year-on-year growth.
In the first half of 2024, the volume and value of online transactions surged by 60 percent and 85 percent, respectively, compared to 2023. Bank transfers now dominate online payments, accounting for over 51 percent of transactions, followed by POS devices at 28.5 percent. ATMs and direct debit systems lag significantly behind.
Stakeholders say Fintechs have capitalised on this trend, with platforms like Paystack integrating directly with banks to simplify online payments. Opay, PalmPay, and Moniepoint have become trusted names, offering seamless small-ticket payment solutions that resonate with tech-savvy Nigerians.
Similarly, POS transactions have grown remarkably over the past five years, increasing from N3.21 trillion in 2019 to over N85 trillion in 2024—a staggering 2,576 percent increase. This growth has been driven largely by the agency banking industry, which now boasts 1.5 million agents nationwide.
According to KPMG customer experience report, in 2024, agency banking outlets became indispensable, with 83 percent of customers visiting these outlets at least once a month, up from 75 percent in 2023.
These agents provide essential services, including cash withdrawals and transfers, especially in areas with limited traditional banking infrastructure.
However, challenges persist, including POS network failures, machine breakdowns, cash shortages, and high transaction fees. Addressing these issues will require significant investments in infrastructure, reduced fees, and simplified processes to ensure continued growth and financial inclusion.
Mobile money operators (MMOs) witnessed extraordinary growth, with transaction volumes increasing by 151 percent in 2022 and total transaction values rising by 140 percent. Similarly, mobile app transfers saw a 123.85 percent increase in transaction volumes and a 108.84 percent rise in value.
The proliferation of smartphones, projected to reach 60 percent penetration by 2025, has played a significant role in driving digital payment adoption. Over 143 million Nigerians now own smartphones, enabling seamless access to fintech platforms and increasing confidence in digital payment security.
The Central Bank of Nigeria’s (CBN) regulatory frameworks, such as Payment System Vision 2020 and 2025 (PSV2020 and PSV2025), have been pivotal in advancing digital payments. Initiatives like Real-Time Gross Settlement (RTGS) have bolstered the growth of payment channels such as NIBSS Instant Payments (NIP), which saw a 47.99 percent increase in transaction volume in 2022.
Despite modernisation efforts, traditional banks continue to struggle with reliability issues. Service disruptions, app crashes, and network downtimes have eroded customer trust, with 21 percent of retail banking customers citing these issues as reasons for switching banks in 2024.
Although weekly ATM usage increased slightly from 43 percent in 2023 to 44 percent in 2024, the need for a hybrid financial approach—balancing digital and cash services—remains evident.
The dominance of fintech platforms during the Yuletide underscores the urgent need for innovation and customer-centricity in Nigeria’s financial sector. Investments in AI, data analytics, and cloud-based infrastructure will be critical for enhancing customer experiences and addressing service disruptions.
For customers, the rise of fintech offers a glimmer of hope amidst systemic challenges. However, achieving a truly inclusive and efficient financial system will require collaboration among regulators, financial institutions, and technology providers.
Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), says increasing transaction volumes of non-bank financial institutions threatens the stability of Africa’s financial system.
“We reiterate the importance of monitoring trends, risks and innovations of NBFIs/OFIs as their increasing transaction volumes pose major financial system stability risk,” Cardoso said.
As Nigeria’s financial landscape continues to evolve, analysts believe that the festive season serves as a reminder of the importance of reliability, transparency, and adaptability in meeting the demands of a rapidly changing economy. Traditional banks must embrace these principles to remain relevant in an increasingly competitive market.
