Banking the economy that actually exists

There is a version of the Nigerian economy that the banking sector has always served well. It is the economy of salaried professionals, corporate treasurers, documented collateral, and monthly pay cycles. It is the economy that fits neatly into conventional credit models, standard account structures, and the risk frameworks that Nigerian banking inherited from its colonial and post independence institutional architecture. That economy is real, and serving it matters.

There is another version. It is the economy of the cooperative chairwoman in Ogun whose members pool contributions weekly. The textile trader in Balogun who turns inventory four times a month but has never had a formal credit history. The agro dealer in Kaduna whose working capital needs spike in planting season and collapse in the dry months. The artisan in Aba whose business has been profitable for fifteen years, but whose collateral is her workshop and her reputation. This economy is also real. It is, by most measures, larger than the first; and for most of Nigerian banking history, the sector was not designed to serve it.

The gap is not a matter of intention. It is a matter of architecture. Conventional banking products were designed around a specific customer profile: formally employed, predictable monthly income, assets that could be valued and pledged, credit history held in a bureau. Nigerians who fit that template, whether men or women, whether in Lagos or Kano, were served well. Those who did not, regardless of how productive their economic activity, were structurally underserved. They were not refused service. The products simply did not fit the shape of their lives.

The numbers confirm what anyone who has spent time in a Nigerian market already knows. According to the 2023 EFInA report, 26 per cent of Nigerian adults remain financially excluded. The World Bank’s surveys of Nigerian SMEs consistently identify access to finance as the single largest constraint on business growth, particularly among enterprises operating in the informal and semi formal sectors.

These are not idle businesses. They are enterprises generating real output and real employment, operating in a financial blind spot that the banking sector created not through malice but through product design.

A small number of institutions have begun to close that gap by building differently. Union Bank of Nigeria is one of them. Through alpher, the bank’s financial proposition designed specifically for underserved market segments, Union Bank disbursed over ₦150 million in cash flow loans to entrepreneurs in a single three month window in 2025. The underwriting methodology behind alpher was built for businesses whose income flows through market associations and cooperative structures rather than through conventional payroll. These are businesses that traditional credit scoring cannot see, not because they are risky but because the scoring model was never calibrated for them.

Through alpher partnerships, the bank extended more than ₦106 million in discounted credit to seventy one businesses operating in market clusters that had previously sat outside the formal banking system. Its financial literacy outreach through alpher reached over 230 individuals in targeted sessions, and a parallel programme supported fifty nine previously unbanked entrepreneurs with micro grants and account opening.

The significance of these numbers is less in their volume and more in their method. alpher represents a decision to redesign the product rather than wait for the customer to fit the existing one. That is a meaningful institutional choice, because it requires a different kind of underwriting capability, a different kind of relationship management, and a different kind of patience than conventional retail or SME banking demands.

What makes Union Bank’s work on financial inclusion credible is that the institutional culture behind it is itself built on inclusion. Forty-five per cent of the bank’s board is female, exceeding the Central Bank of Nigeria’s thirty per cent governance threshold by fifteen percentage points.

The Managing Director and Chief Executive Officer, Mrs Yetunde B Oni, leads an institution whose most recent graduate intake was sixty per cent female. The bank offers five month fully paid maternity leave, among the longest in the Nigerian banking sector, alongside ten day fully paid paternity leave, formalised adoption and surrogacy leave, and the CareCube crèche facility at the head office. These are not separate from the bank’s external inclusion work.

They are the internal architecture that makes it possible. An institution that invests in the breadth of its own talent base develops a broader product imagination than one that does not.

The honest assessment is that the Nigerian banking sector as a whole has a considerable distance still to cover. The informal and semi formal economy remains the largest segment of Nigerian economic activity, and it remains the least well served by formal financial institutions.

The products available to this segment are still too few, still too expensive in many cases, and still too narrowly distributed. Closing the gap will require more institutions to make the same architectural choice that the early movers have made: to build for the economy that actually exists, not for the economy that conventional banking assumed it was serving.

As Union Bank enters its 109th year, the inclusion question is not peripheral to its institutional story. It is central to it. A bank that has been present in Nigeria since 1917 has watched the country’s economic structure change repeatedly. The cooperative economies of the North, the trading networks of the South West, the manufacturing clusters of the South East, and the digital enterprises of Lagos each demand different financial products and different engagement models. The institutions that build for that diversity will be the ones that remain relevant. The ones that do not will find that the economy they were designed to serve is no longer the economy they need to serve.

Nigeria’s productive economy is broader, more diverse, and more resilient than any single customer profile can capture. The banking sector’s next chapter will be defined by which institutions recognised that earliest and built accordingly. Union Bank of Nigeria has started. The work continues.