Fintech, banks must collaborate to bridge Nigeria’s financial inclusion gap – Adebiyi

Adekunle Adebiyi, a former senior executive at MTN and current Chief Commercial Officer at Itex Integrated Services Ltd, has said that Nigerian banks and fintech must collaborate to bridge Nigeria’s digital inclusion gap.

Adebiyi spoke in a monitored interview on Nigeria Info FM, where he extensively explored the impact of fintech on Nigeria’s financial inclusion goals.

He shed light on the role of fintech in the country’s financial inclusion strategy, and how a focus on rural distribution can help reach more unbanked Nigerians.

“Fintechs work with traditional banks to improve the sustainability and accessibility of the services they offer to the public. Because of this, distribution is crucial if we are to reach Nigerians without bank accounts.

“Rural areas, where more unbanked people reside, must become the focus instead of metropolitan and semi-urban areas. As a country, we have made progress toward financial inclusion, but if we are to meet our goal, we must use financial technology,” Adebiyi said

According to him, “Rural communities continue to suffer as banks cut operational costs by reducing the number of ATMs and branches, focusing instead on getting more customers to embrace digital banking through smartphones.

“Yet, 40 percent of adults living in rural areas have no formal bank account and limited smartphone access.

“Thankfully, PoS terminals and mobile money agents are increasing, providing financial services and, in some cases, acting as an agent through which the unbanked can open tier 1 bank accounts requiring only passport photographs.”

Although Nigeria has the largest economy in Africa and is home to five of Africa’s seven unicorns, its target for financial inclusion as stated in the National Financial Inclusion Strategy (Revised) in 2018 had a goal to reach 80percent financial inclusion in the year 2020, but only 64percent of Nigerian adults were financially included by the end of 2020.

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According to World Bank’s 2021 Global Findex, Nigeria was one of seven nations that contributed to half of the world’s unbanked population. By the end of 2021, the number of financially excluded persons in Nigeria was estimated to be 38 million, even though the gap between banked and unbanked people has been closing since 2011.

These numbers are not surprising given that 47.25 percent of the Nigerian population live in rural areas and cannot get efficient financial services because most traditional banks do not have extensive branch networks. However, Nigeria is progressively narrowing the gap between the banked and unbanked, and the Central Bank of Nigeria’s goal for financial inclusion no longer feels like a far-off dream since the rise of fintech and agent banking in the financial sector.

Following the COVID-19 pandemic, digital financial transactions increased by 325 percent to ₦704.04 trillion in 2020 from ₦165.8 trillion in 2019. According to NIBSS data as of August 2022, the volume of financial transactions in a month had reached an all-time high, totalling ₦238.7 trillion. Nigerians may support the CBN’s cashless strategy, but that does not necessarily mean that the unbanked have increased access to these financial services. As a result, fintech is crucial in Nigeria’s effort to achieve financial inclusion.

The Central bank of Nigeria has set a target to reach 95 percent financial inclusion by 2040. With innovations spearheaded by fintech, an increase in mobile money operators, the recent increase in Nigeria’s financial inclusion rate, and collaboration among stakeholders, the projection is not nearly as unachievable as it may have seemed years ago.