“Serving The Unseen Economy: How Banks Are Adapting To Nigeria’s Reality”
Written by Rashidat Olushola Okunlade
For decades, Nigeria’s banking sector has efficiently served a familiar segment of the economy salaried workers, corporate entities, and customers whose financial lives align with formal structures such as predictable income streams, documented collateral, and established credit histories. This segment remains important, and the system built around it has delivered value.
However, this is only one side of Nigeria’s economic reality.
A much larger, more dynamic segment operates outside these conventional frameworks. It includes cooperative societies, informal traders, seasonal agro-dealers, and long-established artisans whose businesses generate consistent income but lack formal documentation. These actors form the backbone of Nigeria’s productive economy, yet they remain structurally underserved not due to deliberate exclusion, but because traditional banking models were never designed with them in mind.
The limitation is fundamentally architectural. Conventional banking products are optimized for customers with formal employment, stable monthly earnings, and verifiable credit footprints. Those who do not fit this profile often find themselves excluded not by policy, but by product design.
Data reinforces this structural gap. According to the Enhancing Financial Innovation & Access (EFInA) 2023 report, 26 percent of Nigerian adults remain financially excluded. Similarly, the World Bank consistently identifies access to finance as the primary constraint facing small and medium enterprises, particularly within informal and semi-formal sectors.
These enterprises are neither idle nor insignificant. They generate employment, sustain supply chains, and contribute meaningfully to economic output, yet operate within a financial blind spot shaped by legacy banking models.
A shift is emerging.
Institutions like Union Bank of Nigeria have begun to address this gap by rethinking product architecture. Through its alpher initiative designed to serve underserved and non-traditional segments the bank is experimenting with alternative approaches to credit and financial inclusion.
In 2025, alpher facilitated over ₦150 million in cash flow-based loans within a three-month period, targeting entrepreneurs whose financial activities are anchored in cooperative systems and market associations rather than formal payroll structures. Through strategic partnerships, the bank also extended more than ₦106 million in discounted credit to 71 businesses previously outside the formal financial system.
Beyond credit, the initiative has delivered financial literacy programmes to over 230 individuals and supported 59 unbanked entrepreneurs with micro-grants and access to formal accounts.
The significance of these interventions lies less in scale and more in methodology. Rather than forcing customers into existing frameworks, the model adapts to the realities of how these businesses operate, recognising informal cash cycles, social collateral, and community-based trust systems.
This approach requires a fundamental shift in banking capabilities: new underwriting models, relationship-driven engagement, and longer-term investment horizons.
Importantly, Union Bank’s external inclusion efforts are mirrored internally. The bank’s governance and workforce structure reflect a deliberate emphasis on diversity. Women constitute 45 percent of its board exceeding regulatory benchmarks while its leadership, under Managing Director and CEO Yetunde B. Oni, has prioritised inclusive talent development. Recent graduate intakes have been 60 percent female, supported by progressive workplace policies including extended parental leave and childcare infrastructure.
These internal dynamics are not incidental; they shape institutional thinking. A more diverse organisation is better positioned to design products for a broader customer base.
Despite these advances, the broader Nigerian banking sector still faces a significant inclusion gap. Informal and semi-formal enterprises remain underserved, with limited access to affordable and appropriately structured financial products.
Closing this gap will require more institutions to make a deliberate architectural shift moving away from rigid, legacy frameworks toward models that reflect the complexity and diversity of Nigeria’s real economy.
As Union Bank approaches its 109th year, its evolving strategy underscores a broader industry imperative. Nigeria’s economy is not monolithic. It spans cooperative systems in the North, trading ecosystems in the South-West, manufacturing clusters in the South-East, and rapidly growing digital enterprises in Lagos.
Banks that recognise and design for this diversity will remain relevant. Those that do not risk becoming misaligned with the very economy they aim to serve.
Nigeria’s economic strength lies in its breadth and resilience. The future of banking in the country will be defined by institutions willing to build for that reality not an outdated approximation of it.
