Despite the fintech revolution, 26 million Nigerians remain unbanked- CBN report

Hauwa Abdullahi wakes up at 5 AM every morning to sell vegetables in Katsina’s central market.

She’s been doing this for 40 years. By 6 AM, her stall is arranged. You’d see pyramids of tomatoes, neat rows of peppers, bundles of fresh greens. She knows her customers by name. She knows who pays cash and who asks for credit until the month-end. She knows exactly how much profit she makes each day because she counts it by hand, every single kobo.

What Hauwa doesn’t know is what it feels like to have a bank account.

At 62 years old, she has never walked into a bank, filled out a form, received a debit card or transferred money with her phone. In a country processing 11 billion digital transactions a year, Hauwa remains completely invisible to the financial system.

And she’s not alone.

26 million people, Nigeria’s fintech boom left behind

According to the Central Bank of Nigeria‘s first-ever fintech ecosystem report, 26% of Nigerian adults (about 26 million people) have no access to formal financial services.

While Lagos celebrates billion-dollar fintech valuations and Abuja processes instant payments, millions of Nigerians like Hauwa are stuck in a parallel economy where cash is king and digital finance might as well be science fiction.

But the exclusion isn’t spread evenly. The numbers reveal a country split along geographic and economic lines:

Translation: If you're in Northern Nigeria, nearly half of the people around you have never used formal financial services. If you live in a rural area anywhere in the country, more than one in three neighbours are financially invisible.

Why digital ID keeps people out

Back to Hauwa. A fintech startup approached her market last year. Young people with tablets, promising instant loans, savings accounts, and digital payments. No paperwork. No bank visits. Just download an app.

Hauwa was interested. Until they asked for her National Identity Number.

“I have one,” she told them. “But I don’t remember it. And my card is at home.”

The agent tried to verify her identity through the app. The system timed out. They tried again. Same result. They promised to come back tomorrow. They never did.

This isn’t an isolated incident. When the Central Bank surveyed fintech companies about their biggest obstacles to reaching excluded populations, 37.5% pointed to the same issue: lack of digital identity verification and credit history.

Nigeria has the infrastructure. The National Identity Management Commission (NIMC) has enrolled millions. The Bank Verification Number (BVN) system exists. But connecting to these systems costs money, works inconsistently, and often fails at the exact moment someone like Hauwa tries to get verified.

It’s not just identity, it’s everything.

The CBN report asked fintech entities to identify what prevents them from reaching people like Hauwa. The answers reveal how many barriers stack against financial inclusion:

Notice what’s missing from this list: demand. The report doesn’t say people don’t want financial services. It says the infrastructure to deliver those services to them either doesn’t exist or costs too much to build.

Why fintech can’t afford to serve the excluded

FINANCIAL EXCLUSION BY THE NUMBERS

• 26% – Nigerian adults with no access to financial services
• 37% – Exclusion rate in rural areas
• 47% – Exclusion rate in Northern Nigeria
• 37.5% – Fintechs citing digital ID barriers as the main obstacle
• 75% – Say tiered KYC is the most effective inclusion strategy
• 25% – Cite the cost of last-mile delivery as a barrier

Here's the uncomfortable truth buried in the data: serving people like Hauwa isn't profitable.

The economics are straightforward but brutal because every verification costs money. Every failed transaction costs money. Building an agent network in a village costs money. And the transaction values are so small that companies lose money on every customer for the first two years.

The report reveals that 25% of fintech entities cite ‘cost of last-mile delivery’ as a barrier. This is code for: it’s too expensive to bring financial services to the people who need them most.

The current business model rewards companies for serving wealthy urban customers who make large, frequent transactions. It punishes companies for serving poor rural customers who make small, infrequent purchases.

When the phone isn’t smart enough

Even when fintech entities try to reach excluded populations, they run into another wall: 25% cite limited mobile and data penetration as a barrier.

Hauwa has a phone. It’s a feature phone she bought three years ago for ₦5,000. It can make calls and send texts. It cannot download apps, access mobile banking, or verify her identity through a QR code.

When a fintech company tells her to ‘just download our app,’ they might as well be speaking a foreign language. Her phone can’t do that. And she can’t afford a smartphone that can.

This is the gap between innovation and inclusion. Nigeria’s fintech platforms have built world-class mobile apps. But millions of Nigerians don’t have the devices to use them.

Despite these barriers, some fintech platforms are making progress. The report asked what strategies work best for expanding access. The answers are revealing:

The winner is clear: tiered KYC. This means letting people open basic accounts with minimal documentation, then upgrading them as they build trust and history. It’s not perfect, but 75% of fintech entities say it’s their most effective tool for reaching the excluded.

Let’s say Hauwa overcomes every barrier. She gets verified. She downloads an app on a borrowed smartphone. She opens an account. She deposits her first ₦5,000.

Then the app crashes. Her money disappears for three days. When it comes back, there’s no explanation, just a generic ‘system error’ message.

Will Hauwa ever use that app again? Will she recommend it to her fellow traders? Or will she go back to hiding cash under her mattress?

The CBN report identifies trust as a ‘central barrier to inclusion.’ Infrastructure matters. Affordability matters. But if people don’t trust the system, none of it works.

What would it take to reach the 26 million?

The Central Bank’s report doesn’t just diagnose problems, it suggests solutions. Based on industry feedback, here’s what would actually move the needle:

1. Make Digital ID verification cheaper and more reliable

The infrastructure exists. NIMC has enrolled millions. BVN is operational. But fintech entities need affordable API access that actually works. When verification costs ₦200 per customer and fails 30% of the time, reaching poor customers becomes impossible.

2. Expand USSD and feature phone solutions

Not everyone has a smartphone. But almost everyone has a phone. USSD banking works on any device. It’s not sexy, but it reaches millions who can’t download apps.

3. Subsidise last-mile infrastructure

The market won’t solve this alone. Serving rural areas needs to be subsidised, either through government programmes, development finance, or cross-subsidies where urban customers help fund rural access.

4. Build trust through transparency

When transactions fail, users need to know why. When systems go down, they need updates. When money goes missing, they need recourse. Trust doesn’t happen by accident; it’s built through consistent, transparent communication.

Hauwa is still waiting

Back in Katsina market, Hauwa is counting today’s earnings. ₦8,500 in crumpled notes. She’ll walk home with it in her wrapper, hoping she doesn’t get robbed. She’ll hide it under her mattress, where inflation slowly eats away its value.

She could earn interest in a savings account. She could build a credit history. She could receive payments instantly from customers in other states. She could invest in her business without carrying cash.

But she can’t. Because the infrastructure to verify her identity costs too much. Because the economics of serving her don’t work. Because her phone can’t download apps. Because trust is in short supply.

Nigeria processes 11 billion transactions a year. But none of them are hers.

And until the barriers in this report are addressed, she and 26 million Nigerians like her will remain invisible to the financial system they hear so much about but can never touch.

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