CEM REPORT, INDUSTRY| Nigeria’s financial landscape is experiencing a significant transformation, with the number of active bank accounts skyrocketing to a staggering 219.6 million in March 2024.
This data, released by the Nigeria Inter-Bank Settlement System (NIBSS), marks a remarkable increase compared to the 151 million active accounts reported at the end of 2022. This translates to a growth of a whopping 68.6 million accounts in just 15 months.
Delving deeper into the NIBSS data reveals that between January and March 2024 alone, a significant number of new accounts were opened across Nigerian banks. The figures indicate an influx of roughly 17 million new accounts within the first quarter of this year. This trend suggests a growing appetite for financial inclusion among Nigerians, potentially driven by several factors.
Factors Driving Growth
Experts attribute this surge in active bank accounts to a confluence of factors. Increased mobile phone penetration and the proliferation of digital financial services are undoubtedly playing a key role. Fintech startups, offering innovative mobile banking solutions and easier access to financial products, are attracting a wider segment of the population.
“The rise of mobile banking and user-friendly financial apps has significantly simplified the process of opening and managing bank accounts,” says Adeola, a financial analyst based in Lagos. “This has made banking more accessible, particularly for those who were previously unbanked due to geographical limitations or complex procedures.”
Furthermore, the Central Bank of Nigeria’s (CBN) push for financial inclusion initiatives aimed at reaching the underbanked population is likely contributing to the growth. These initiatives, coupled with government efforts to promote digital payments, are fostering a more inclusive financial ecosystem.
Decline in Dormant Accounts
The NIBSS report also highlights a positive trend in the reduction of dormant bank accounts. Defined as accounts with no activity for a period of 12 months, these accounts pose a security risk and create administrative burdens for banks. The data reveals a significant decrease in dormant accounts, falling from 72.8 million in 2022 to 19.8 million in March 2024.
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This decline can be attributed to several reasons. Banks are increasingly employing strategies to reactivate dormant accounts, such as targeted marketing campaigns and offering incentives for renewed activity. Additionally, the growing adoption of digital banking encourages more frequent account usage, preventing accounts from becoming dormant.
The BVN Gap
While the surge in active accounts is a positive development, the data also sheds light on a persistent gap between the number of accounts and Bank Verification Numbers (BVNs). As of April 2, 2024, the NIBSS database recorded approximately 61.5 million registered BVNs. This disparity raises questions about the effectiveness of BVN penetration.
Industry analysts, however, point out that the gap might not be as significant as it appears. Since a single BVN can be linked to multiple accounts, the actual number of individuals with BVNs might be closer to the figure for active accounts.
“The ability to link multiple accounts to a single BVN likely contributes to the apparent gap,” explains Dr. Nnamdi, an economist specializing in the Nigerian financial sector. “However, the increasing use of BVNs as a mandatory requirement for opening new accounts and accessing financial services is a positive step towards greater financial transparency and security.”
If You Ask
The dramatic rise in active bank accounts in Nigeria signifies a burgeoning financial sector teeming with potential. With continued efforts to promote financial inclusion and enhance digital banking infrastructure, Nigeria’s banking landscape is poised for further growth. As the gap between accounts and BVNs narrows, the financial system can expect increased transparency and security.
This surge in active accounts presents exciting opportunities for both financial institutions and consumers. Banks can leverage this growth to develop innovative financial products and services tailored to the needs of the newly banked population. Consumers, on the other hand, will benefit from greater financial inclusion, access to credit, and improved financial management tools.
However, challenges remain. Ensuring financial literacy among the newly banked population and addressing security concerns in the digital financial space are crucial areas that require ongoing attention. By tackling these challenges effectively, Nigeria can solidify its position as a leader in financial innovation and inclusion on the African continent.
