By Peace Udugba -The daily torch media
There is a version of the Nigerian economy that the banking sector has traditionally served well. It is the world of salaried professionals, corporate treasurers, documented collateral, and predictable monthly pay cycles. This segment fits neatly into conventional credit models, standard account structures, and risk frameworks inherited from Nigeria’s colonial and post-independence banking architecture. It is a real and important part of the economy.
But there is another version—arguably larger and more dynamic. It is the economy of the cooperative chairwoman in Ogun State whose members contribute weekly, the textile trader in Balogun Market who rotates inventory multiple times a month without a formal credit history, and the agro-dealer in Kaduna whose capital needs fluctuate with the farming seasons. It includes the artisan in Aba whose business has thrived for over a decade, supported not by formal collateral but by skill, reputation, and community trust.
This segment of the economy has long existed in a financial blind spot. The issue has not been a lack of intent from banks, but a mismatch in design.
Traditional banking products were built around formally employed individuals with predictable income and verifiable assets. Those outside this framework—despite being productive and profitable—have remained structurally underserved, not because they were rejected, but because the system was never designed with them in mind.
Data supports this reality. According to a 2023 report by Enhancing Financial Innovation & Access (EFInA), about 26 percent of Nigerian adults remain financially excluded. Similarly, World Bank surveys consistently identify limited access to finance as the biggest constraint facing small and medium-sized enterprises (SMEs), especially in the informal and semi-formal sectors.
These are not marginal businesses. They are key drivers of employment and economic activity, operating without adequate access to formal financial services.
In recent years, however, a few institutions have begun to rethink this approach. Union Bank of Nigeria is among those taking deliberate steps to bridge the gap.
Through alpher, its financial proposition tailored to underserved segments, the bank has introduced lending models that align more closely with the realities of informal and semi-formal businesses. In a three-month period in 2025 alone, over ₦150 million in cash-flow-based loans were disbursed to entrepreneurs. These loans were underwritten using methodologies designed for businesses operating within cooperative systems and market associations, rather than traditional payroll structures.
Additionally, through strategic partnerships, more than ₦106 million in discounted credit was extended to 71 businesses within market clusters that previously had little or no access to formal banking. Financial literacy programmes under the initiative reached over 230 individuals, while a parallel effort supported 59 previously unbanked entrepreneurs with micro-grants and account openings.
The significance of these interventions lies not just in the numbers, but in the approach. Rather than expecting customers to adapt to existing systems, alpher represents a shift toward redesigning financial products to reflect real economic behaviors. This requires new underwriting models, stronger community engagement, and a longer-term outlook than traditional retail banking.
Equally notable is the institutional culture supporting this shift. Women make up 45 percent of the bank’s board, surpassing the Central Bank of Nigeria’s 30 percent benchmark. Under the leadership of Managing Director and CEO Yetunde B. Oni, the bank’s most recent graduate intake was 60 percent female.
Employee-focused policies—including five months of fully paid maternity leave, 10 days of paid paternity leave, adoption and surrogacy leave, and an on-site childcare facility—reflect a broader commitment to inclusion. This internal diversity helps shape a wider, more adaptive approach to product development and customer engagement.
Despite these efforts, significant gaps remain across the banking sector.
Informal and semi-formal enterprises still represent the largest share of Nigeria’s economy, yet they remain the least served. Financial products targeting this segment are still limited, often expensive, and not widely accessible.
Closing this gap will require more institutions to rethink their frameworks and design solutions that reflect how Nigerians actually earn, save, and invest.
As Union Bank of Nigeria marks over a century of operations, its evolving approach highlights a broader truth: the future relevance of banks will depend on their ability to serve the full spectrum of Nigeria’s economic reality. From cooperative systems in the North to trading networks in the South West, manufacturing hubs in the South East, and digital enterprises in Lagos, the diversity of the economy demands equally diverse financial solutions.
Nigeria’s economy is broader and more resilient than any single model can capture. The next chapter of banking will be defined by institutions that recognize this—and build for it.
