What's Happening?
Nigeria's financial inclusion efforts, which have been lauded for their innovation and expansion, are facing significant challenges due to a growing trust gap among users. Over the past fifteen years, Nigeria has developed a robust financial system that
includes payment rails, biometric identity systems, and a licensing regime that integrates fintech players and mobile money operators. However, despite these advancements, the use of financial services has stalled. According to data from the Nigeria Inter-Bank Settlement System, more than 33 million bank accounts were dormant as of March 2025, a sharp increase from under 20 million a year earlier. This rise in dormancy is partly attributed to regulatory changes requiring account linkage to verified identity numbers, but the underlying trend of increasing dormancy persists. The issue is compounded by a fragmented system where responsibility for customer experience is unclear, leading to a loss of confidence among users.
Why It's Important?
The trust gap in Nigeria's financial system has significant implications for the country's economic development and financial stability. Dormant accounts indicate a failure to convert access into habitual use, which undermines the potential benefits of financial inclusion. Trust is a critical component of financial systems, and its erosion can lead to decreased participation, limiting the effectiveness of financial services in driving economic growth. The situation highlights the need for regulatory reforms that focus on customer experience and accountability across the financial system. Addressing these issues is crucial for maintaining the progress made in financial inclusion and ensuring that the system can support broader economic objectives.
What's Next?
To address the trust gap, Nigeria's Payments System Vision 2028 emphasizes the importance of building confidence in the financial system. This involves recognizing the need for policy attention on trust and implementing reforms that ensure accountability for customer experiences across the system. Regulators may need to shift their focus from institution-specific oversight to a more holistic approach that considers the entire financial ecosystem. This could involve new regulatory frameworks that prioritize customer trust and address the fragmentation of responsibility. The success of these efforts will be critical in determining whether Nigeria can sustain its financial inclusion achievements and leverage them for broader economic benefits.
