Nigeria’s rapid transition towards a digital financial system is creating a new layer of economic exclusion, with millions of residents in fast-growing communities cut off from formal banking infrastructure despite rising fintech adoption and expanding electronic transactions.

Across the country’s urban fringes and underserved suburban settlements, bank branches are either absent or too far to serve growing populations, forcing residents and small business owners to depend heavily on point of sale (POS) agents, unstable digital platforms and costly travel for routine banking services.

Bank officials dismiss the absence of physical bank outlets with the aggressive growth of digital infrastructure. But the explanation, The Guardian, discounts the prevalence of digital illiteracy and poor Internet coverage of new settlements created by suburbanisation.

Findings by The Guardian reveal that while digital banking transactions continue to rise sharply and banks intensify migration towards electronic channels, physical banking infrastructure has failed to keep pace with Nigeria’s population growth, urban expansion and the emergence of new residential corridors.

The result is a widening gap between digital finance growth and actual financial accessibility, especially for low-income earners, traders, artisans, elderly residents and digitally-excluded populations living outside traditional commercial centres.

Industry data shows the imbalance is becoming increasingly severe.

According to the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN), nearly 300 of Nigeria’s 774 local government areas have no commercial bank branch, leaving large segments of the population outside the immediate reach of formal financial institutions.

Even in urban states with strong commercial activity, access to full banking services is becoming increasingly concentrated in older city centres and high-density commercial districts, while newly-created communities continue to expand without corresponding banking infrastructure.

Along Lagos’ Lekki-Epe corridor, communities such as Bogije, Lakowe, Orimedu, Eleko and parts of Ibeju-Lekki have witnessed massive residential and commercial expansion driven by housing demand, industrial projects and population migration. Yet many residents still travel to Sangotedo or Ajah for basic banking services that cannot be resolved digitally.

In several of these communities, residents rely almost entirely on POS agents for daily transactions despite rising transaction charges and network failures.

A similar trend is unfolding within the Federal Capital Territory, where suburban districts are stretching from Dutse Alhaji through Dutse Sokale, Dutse Bokuma, Bmuko, Jabi and neighbouring settlements continue to record rapid population growth without adequate banking presence.

Outside a few commercial nodes such as Kubwa, Bwari and the city centre, residents often spend hours commuting simply to resolve failed transfers, process deposits, or address account-related complaints.

The situation reflects a broader national pattern in which urban expansion is increasingly detached from financial infrastructure planning.

Although banks continue to promote digital banking as a substitute for physical branches, experts say the transition is exposing structural weaknesses in Nigeria’s financial inclusion framework, particularly in areas where digital literacy remains low and the Internet reliability is poor.

Recent industry estimates indicate that Nigeria now has over two million banking agents nationwide, a sharp increase from figures recorded just a few years ago. Agent banking has become one of the fastest-growing components of the country’s financial ecosystem, largely driven by banks’ efforts to reduce operational costs while extending transaction access.

For many Nigerians, especially in low-income communities, the agents (often referred to as POS operators) have effectively become the face of the financial system.

However, analysts argued that while agent banking had improved transaction reach, it had not replaced the broader functions of formal banking infrastructure.

Most agents primarily handle withdrawals, transfers and airtime purchases. More complex banking needs, such as large cash deposits, transaction disputes resolution, documentation updates, credit processing and transaction reversals, still require physical bank visits.

This limitation is quietly reshaping economic behaviour in many communities. For traders and informal business operators, depositing money into the banking system is no longer a routine but strategic. Many now delay deposits, keep larger cash volumes outside banks or rely on informal alternatives because of the stress and costs associated with formal transactions.

The trend may partly explain why currency outside the banking system continues to rise despite the country’s cashless policy drive.

Data from the Central Bank of Nigeria (CBN) show that currency outside banks rose to about N5.2 trillion in February 2026 from N4.51 trillion a year earlier, highlighting the persistence of cash dependency despite growing digital transactions.

Financial analysts said the development reflects deeper structural realities beyond consumer preference.

Weak banking penetration, unreliable network infrastructure, transaction failures, cybersecurity fears and poor digital understanding continue to shape public confidence in formal financial systems.

Beyond rising operational costs, worsening insecurity across the country has also become a major obstacle to banking expansion, experts have said. Rising cases of kidnapping, armed robbery, attacks on businesses, vandalism and general insecurity have made banks increasingly reluctant to invest in new branches and ATM infrastructure, particularly in emerging communities and semi-urban areas.

During the #EndSARS protest in 2020, several banking facilities and ATM points were vandalised across parts of the country, resetting bank chiefs’ approach to physical infrastructure investment.

Combined with the country’s wider security challenges, the incident further heightened banks’ fears around physical expansion, slowing fresh branch deployment that could have helped bridge the growing banking access gap across many underserved communities.

For many residents in excluded communities, cash remains both a backup and a survival mechanism.

In Ijagemo, a densely populated settlement in the Ijegun area of Lagos, a resident, Ezekiel Chinendu, said accessing full banking services now requires careful planning.

“If you have any serious banking issues, you will need to go to Ikotun (about seven kilometres away). It is stressful because you spend money on transport, waste time in queues and sometimes network problems delay everything,” he said.

According to him, most residents now rely almost completely on transfers and POS operators except when there is a failed transaction or account issue requiring direct bank intervention.

“People don’t like going to the bank anymore because it takes almost the whole day,” he added.

In Abuja’s Dutse Sokale community, Godwin Emmanuel said distance has transformed simple financial activities into major daily disruptions.

“If I want to deposit money or solve an issue, I have to travel to Dutse Alhaji or Kubwa. You cannot just go and come back quickly. Sometimes the transport fare alone discourages you,” he said.

Emmanuel noted that although POS agents are readily available, they cannot fully replace traditional banking services.

“Agents help for small things, but when there is a serious issue, they still tell you to go to the bank,” he said.

Also speaking with The Guardian, Abubakar Saliat, a resident of Bmuko in the Federal Capital Territory, said many elderly residents and small traders struggle with digital banking applications due to low digital literacy.

“A lot of people here still do not understand mobile banking properly. If there is any issue with transfers or ATM cards, they become confused immediately,” she said.

According to her, network failures and unsuccessful transactions often worsen public distrust in digital systems.

“In some cases, money disappears for hours or days before reversal. For people who do daily business, that creates panic,” she added.

Small business owner Ameh Charity, who operates within Lagos’ Lekki axis, said the absence of nearby banking halls has gradually increased dependence on POS operators despite huge transaction costs.

“We have adjusted because that is the only option available. But POS charges continue to increase and there are limits to what agents can do. If there is a failed transaction or a large deposit, you still have to travel far,” she said.

She added that many traders now factor banking stress into their business operations.

“Some people even postpone bank issues until they have many transactions to settle together because of the stress involved,” she said.

The growing reliance on digital banking channels comes as financial institutions continue to rationalise branch operations nationwide.

Several commercial banks have reduced branch expansion while investing heavily in mobile banking applications, USSD services, fintech partnerships and automated transaction systems.

Industry operators said the strategy was largely driven by cost realities.

Maintaining physical branches involves heavy operational expenses ranging from diesel costs and electricity supply to security, staffing and infrastructure maintenance.

In low-density or semi-rural communities where transaction volumes are relatively small, banks increasingly consider branch operations economically unsustainable.

A development economist and public sector expert, Prof. Chiwuike Uba, said Nigeria’s banking access challenge has moved beyond convenience and should now be viewed as a structural economic issue.

According to him, the country’s branch-to-population ratio remains critically low.

“Nigeria has fewer than 5,000 commercial bank branches serving over 130 million adults. That means one branch is effectively serving tens of thousands of people,” he said.

Uba warned that unequal banking access contributes directly to uneven economic development across regions.

“At a broader level, the issue becomes structural when unequal access translates into higher transaction costs, weaker SME growth and reduced financial inclusion outcomes. At that stage, it is no longer just about convenience. It becomes a macroeconomic issue,” he stated.

He explained that when communities remain weakly connected to formal financial systems, savings mobilisation becomes limited while monetary policy effectiveness weakens.

“Cash circulating outside the formal system reduces deposit mobilisation and limits credit expansion within the economy,” he added.
Uba also argued that many financial inclusion statistics fail to capture the depth of exclusion within the system.

“A person may have a bank account or perform transfers through an agent, but that does not necessarily mean the person has meaningful access to full financial services,” he said.

According to him, true inclusion should include proximity to banking infrastructure, digital capability, credit access and institutional reliability.

He called for a more balanced financial development strategy that combines digital innovation with physical infrastructure expansion.

“The next phase of financial inclusion must focus on resilience. Agent banking should complement branches, not completely replace them,” he said.

Another economist and central banking expert, Prof. Godwin Owoh, however, maintained that the banking sector’s evolution reflects changing customer behaviour globally.

“Today, banking systems are integrated in such a way that customers can access services from different locations without depending on their original branch,” he said.

He noted that technologies such as the Bank Verification Number (BVN), mobile banking and account integration have significantly reduced the need for physical banking visits.

“Banks are rational economic institutions. If customers are migrating toward digital channels, naturally investment in physical branches will reduce,” he said.

Owoh added that the situation is more pronounced in rural and low-transaction communities where operational costs are difficult to justify.

Still, he acknowledged that the transition has created challenges in areas where digital infrastructure remains weak.

“As digital transactions increase, regulatory oversight and cybersecurity capacity must also improve because risks are growing alongside adoption,” he added.

Analysts said one of the biggest gaps within Nigeria’s digital banking transition remains digital literacy.

While smartphone penetration and mobile banking usage continue to expand, millions of Nigerians still lack the skills required to navigate financial applications securely and effectively.

In many suburban settlements, elderly residents, informal traders and low-income earners depend heavily on third parties to perform transfers and mobile banking operations, exposing them to fraud risks and financial exploitation.

Experts warned that digital finance expansion without corresponding investment in digital education might deepen inequality rather than solve it.

Poor telecommunications infrastructure further complicates the transition.

Across several underserved communities, weak internet signals and unstable mobile networks continue to disrupt transfers and electronic transactions, forcing customers to repeat payments or rely on cash alternatives.

For many residents, failed transactions have become normal parts of everyday banking experiences.

The growing dependence on digital systems has also increased concerns around transaction disputes and fraud management.

Unlike physical branches where complaints can be escalated directly, many customers now struggle with remote customer service channels, delayed reversals and inaccessible dispute resolution processes.

This has further widened distrust among populations already hesitant about fully embracing digital finance.

Analysts argued that Nigeria’s financial inclusion strategy now faces a defining question: whether transaction access alone should be considered true inclusion.

While official statistics increasingly show rising account ownership and digital transaction volumes, millions of Nigerians remain financially vulnerable because access to deeper institutional support remains distant.

In many newly developed communities, the absence of nearby branches means residents are connected to the financial system only at its shallowest level.

They can withdraw cash, transfer funds and receive payments, but meaningful engagement with formal banking institutions remains limited.

For growing businesses, that limitation can affect access to credit, financial history development and long-term economic participation.

Experts insist that without deliberate intervention, the gap between digital convenience and physical access might continue to widen as Nigeria’s cities expand.

They argued that financial infrastructure planning must evolve alongside urban development rather than remain concentrated within older commercial centres.

Beyond banking, they also stressed the importance of improving electricity supply, telecommunications infrastructure and digital education as foundational requirements for sustainable financial inclusion.

For millions of Nigerians living on the edges of expanding cities and underserved communities, the promise of a digital financial future remains incomplete.