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Cumbersome Bank Account Opening Procedures Frustrate Nigerians

The cumbersome and bureaucratic processes involved in opening bank accounts in Nigeria are impeding the growth of the country’s digital economy, WikkiTimes reports. 

Despite government efforts to promote financial inclusion, many Nigerians, especially in rural areas, face hurdles such as excessive documentation, stringent Know Your Customer (KYC) requirements, and delays, which deter them from accessing formal banking services. 

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This backup undermines the nation’s drive toward a cashless economy and digital transformation.

For instance, Abdulmalik Ibrahim, a 37-year-old commercial driver,armed with his National Identification Number (NIN), and a valid driver’s license, arrived at the Access Bank branch in Bauchi, the Bauchi State capital, hoping to complete the process in one visit.

“I thought having a driver’s license and my NIN would be enough. But the bank requested additional documents – a passport photograph, and an electricity bill no older than three months. I had to leave and return three times,” he told WikkiTimes.

For Abdulmalik, opening a bank account should have been a straightforward process. 

However, he encountered procedures that frustrated several citizens and deterred many from entering the financial system.

Across Nigeria, many citizens face similar hurdles, fragmenting to frustration, wasted time, and in some cases, abandoning the process altogether.

The promise of a digital economy in Nigeria is built on financial inclusion – ensuring that every citizen, regardless of location or socioeconomic status, can access banking services. 

For Williams Uko, the Director of the Nigeria Inter-Bank Settlement System (NIBSS), the nation’s rapid shift toward digital payment methods is increasingly becoming the preferred choice for everyday transactions. 

“In Nigeria, Digital Payments continues to grow rapidly and is on track to replacing cash as the norm for daily payments.”

The trend reflects the growing adoption of electronic banking platforms, mobile payment systems, and online financial services, which are reshaping the landscape of commerce in Nigeria. 

He said with continuous innovation in financial technology and internet penetration, the country is poised to establish digital payments as the standard for daily economic activities.

However, opening a bank account in Nigeria, a fundamental step toward financial inclusion, remains daunting.

Despite the proliferation of digital platforms that offer seamless services, banks still rely on clunky procedures.

A System Burdened by Redundancy

The Nigerian banking system relies on multiple identification documents, many of which are already stored in other database platforms such as the National Identity Management Commission (NIMC), the Bank Verification Number (BVN) system, NIBSS, Voter ID database, etc. 

Despite these supposedly interoperable systems, banks still demand physical documents, citing compliance with regulatory requests.

Bank account opening process in a bank in Bauchi

In rural communities, where access to banks is already limited, the documentation requirements further alienate potential account holders. 

Rashida Mohammed, a 35-year-old farmer in Bauchi, described her ordeal in trying to open a bank account to access government agricultural loans.

“They asked for a NEPA (electricity) bill, but my village doesn’t have electricity. I presented to them a letter from my village head, but it was rejected. I gave up after two months,” Aisha told WikkiTimes.

Rashida’s experience highlights the exclusion rural Nigerians face, many of whom rely on informal financial systems due to the barriers posed by formal banking institutions.

Beyond the economic implications, the bureaucratic account-opening process has a psychological toll on citizens. 

Uneasy Process 

Nigeria’s digital economy strategy, outlined in the National Digital Economy Policy and Strategy (NDEPS), aimed to increase financial inclusion from 64% to 95% by 2024

However, the account opening process threatens this target.

In 2022, Aishah Ahmad, the former deputy governor at CBN, speaking about the financial inclusion target, said there was a need to encourage people with the necessary resources to make it happen.

She emphasized the importance of creating a secure and trustworthy environment for digital financial services, stating that efforts were being made to leverage all available resources, including policies, technology, and partnerships with regulators and innovators. 

Aishah also highlighted the need to address users’ concerns about data security, ensuring that potential risks do not deter people from adopting these services. 

Paul Daniel, a financial expert, warned that the current system of decentralisation of personal data could undermine the government’s efforts to transition to a digital economy.

“Financial inclusion is the bedrock of a digital economy. If citizens cannot open bank accounts easily, they remain excluded from digital financial services, e-commerce, and government social intervention programs. 

“This exclusion widens the digital divide,” Paul Daniel added.

Opportunities with Owning a Bank Account

Having a bank account opens the door to a world of financial possibilities, enabling individuals to save securely, access credit, and participate fully in the digital economy. 

For many Nigerians, it is the foundation of economic stability, offering a safe place to store money while providing tools for managing personal finances effectively. 

Beyond individual benefits, it is a gateway to formal financial systems that foster personal and community development.

Bank accounts also serve as a crucial link to government social intervention programs, loans, and grants. 

With access to these programs, account holders can improve their livelihoods through agriculture, education, or small business ventures. 

In addition, the ease of transferring and receiving funds via digital platforms ensures that citizens, regardless of location, are not excluded from the opportunities of a connected economy.

Moreover, integrating into the formal banking system facilitates participation in Nigeria’s cashless economy. 

Account holders can seamlessly engage in e-commerce, pay bills, and even invest in financial products, all of which are essential components of a thriving digital economy. 

For Paul, by eliminating barriers to account ownership, Nigeria can empower millions, boost productivity, and accelerate its transition into a digitally inclusive society.

Regulatory Oversight 

The Central Bank of Nigeria (CBN), as the primary regulator of financial institutions, plays a crucial role in setting policies for account opening procedures. 

While the CBN has introduced initiatives such as tiered KYC requirements to simplify the process, implementation remains inconsistent across banks.

A senior official at the CBN, who spoke on condition of anonymity, acknowledged the challenges but defended the regulatory framework.

“We have provided guidelines to simplify account opening, especially for low-income individuals. However, banks must consider to balance between simplicity and security,” she said.

When asked about holding banks accountable for non-compliance with simplified KYC policies, she admitted that enforcement has been lax.

Solutions from Fintech

In contrast to traditional banks, fintech companies in Nigeria have adopted innovative approaches to streamline the account opening process. 

Platforms such as Kuda Bank, Opay, and PalmPay allow users to open accounts using only their BVN and phone numbers, with no need for physical documents or branch visits.

Ademola Adebayo, a fintech entrepreneur based in Abeokuta, Southern Nigeria, emphasized the importance of leveraging technology to enhance financial inclusion.

“Our goal is to eliminate the barriers that prevent Nigerians from accessing financial services. By using digital verification and biometric data, we can onboard customers quickly and securely.”

Steps to an Inclusive System

Ahmed Isah, a civil society advocate and member of the Gaskiya Multipurpose Forum, a local association in Bauchi State, urged the CBN to enforce compliance with simplified KYC policies and penalize banks that impose unnecessary barriers.

“We need a regulatory framework that prioritizes customer convenience without compromising security. 

“The CBN must ensure that banks implement tiered KYC requirements effectively,” Isah said.

He maintained that to create a more inclusive and accessible banking system, the CBN must strengthen regulatory enforcement by ensuring strict compliance with KYC policies and imposing penalties on banks that defy them. 

Corroborating Isah, Paul, the financial expert said banks should also leverage technology by adopting digital verification systems and utilizing biometric data to streamline the account opening process, thereby reducing the reliance on physical documents. 

He said enhancing public awareness through financial literacy campaigns is also essential to educate citizens on the requirements for opening bank accounts.

Paul explained that addressing the unique challenges faced by especially rural populations is equally critical.

The economist noted that fostering collaboration between traditional banks and fintech companies can help both sectors share best practices and develop customer-centric solutions that align with global standards for financial inclusion.

This report is produced under the DPI Africa Journalism Fellowship Programme of the Media Foundation for West Africa and Co-Develop

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