In Nigeria, banking isn’t ubiquitous. Although the number of active bank accounts has been steadily increasing, a study by EFInA on trends in access to financial services released last year shows that many gaps remain. For instance, more than 42 million adults live in rural areas that lack basic banking services and over 60% of rural communities surveyed didn’t have a bank branch, mobile money agent, or ATM.
While there are several conversations and efforts aimed at banking the unbanked, not enough is said about Nigerians that are underbanked. That is, those who have access to one financial product but are denied more.
In Nigeria, Branch launched three years ago with a money lending license to offer quick loans to individuals and had processed more than 2 million loans to well over 700,000 customers by late 2019.
Managing Director of Branch’s unit in Nigeria, Dayo Ademola, said “There’s a huge population of people who have BVN and savings accounts with traditional commercial banks but only make deposits and withdrawals without access to loans or investment products,” the Branch MD notes. “So that’s really our target market. We’re structured to be able to tackle that problem for people who are included but underserved.”
Branch is a leading firm in the lendtech space. By the end of 2021, the company had processed more than ₦50 billion ($120 million) in over 4 million loans, per data made available to TechCabal.
Nigeria has well more than 100 million mobile phone users based on subscriptions. But less than 20% of the population use smartphones while the rest rely on feature phones, limiting their options to voice calls and text messages and, in addition, the pool of potential users of digital-only banks.
Branch will at some point adopt agent networks to reach more potential customers beyond smartphone users and the already banked population? Ademola didn’t give much away. “You can’t operate a bank in a country like Nigeria without considering some sort of offline access,” she said. “So it’s something we’re thinking about. Are we going into that space? Maybe yes, maybe no.”
Nigeria is the largest market of Branch, which is headquartered in Silicon Valley, followed by India. The company also has a presence in Tanzania and Kenya with plans to launch in South Africa, Ghana, and Uganda this year.