Union Bank of Nigeria
Union Bank of Nigeria
Bringing banking to low income communities in northern Nigeria.
BCTA MEMBERSHIP STATUS
Alumni
SECTOR
Financial Services
HEADQUARTERS
Nigeria
REGION OF INITIATIVE
Africa
SDG CONTRIBUTION
RELATED NEWS
Union Bank of Nigeria (Union Bank) joined Business Call to Action (BCtA) in January 2018 with a pledge to provide access to financial services for at least 30,000 people from low income communities in 11 states across northern Nigeria by 2020, where currently more than half the population are unbanked.
Currently, 42 percent of Nigerian adults, or 96 million people, are excluded from the financial system as they do not have bank accounts or access to any other formal or informal financial services. In northern Nigeria, these figures are even higher (estimated at 62 percent and 70 percent in the North East and North West respectively). Due to deeply ingrained cultural norms across the North, women are less likely to use financial services than men (47 percent of adult women are financially excluded compared to 37 percent of adult men).
In addition, income earning capacity in the predominantly agrarian northern Nigeria is significantly lower than the rest of the country, averaging between US$82-98 monthly for employed individuals.
To address this, Union Bank has adapted its standard 2-year savings account, UnionKorrect, offering a tailored version called UnionKorrectDaiDai. This service reduces entry barriers by waiving the requirement for formal identification documents, such as having proof of fixed address, to open an account. In addition, UnionKorrectDaiDai customers are only required to save a minimum of US$3 monthly, compared to $16 monthly with the standard UnionKorrect account. Finally, taking into consideration that communities in this region are predominantly Muslim, financial products have been tilted away from payment of interest towards provision of incentives to savers. As a measure of its success, since its launch in February 2016, over 30,000 UnionKorrectDaiDai accounts have already been opened by low income customers.
While providing Nigerians with an opportunity to safely bank their money, the initiative also generates profits for the bank, making it a win-win innovation. By accessing funds over a two-year period from low income earners, UnionKorrectDaiDai generates income for the Bank as they are invested and repaid as capital and incentives.
At the same time, the Bank will partner with telecom companies in Nigeria to leverage a country-wide network of agents to reach out to low income individuals and encourage them to open accounts using mobile phones. Union Bank will also partner with Paga, a merchant-based fintech company (and fellow BCtA member) which has the country’s largest network of financial access points in Nigeria. Through its 10,500 local agents, Union Bank will be able to reach communities previously out of reach of their financial services. Through these networks, Union Bank will extend access to finance to low income earners through ‘wallet accounts’, which do not require the rigorous regulatory documentation required for standard accounts.