Nigeria Neobanks Outpace Traditional Rivals with 12% Savings Rates, Active Accounts Reach 311.65 Million

The competition between neobanks and traditional banks in Nigeria reflects divergent strategies in capturing the country’s banking landscape. Neobanks such as Kuda, Moniepoint, and OPay have surged in popularity through mobile-first platforms, offering low fees, rapid onboarding, and tailored services for underserved segments. Moniepoint processes over 800 million monthly transactions, while PalmPay claims 35 million registered users and one million SME clients. Neobanks leverage digital distribution and agent networks to expand reach, particularly in rural areas, and provide competitive interest rates—Kuda, for instance, offers up to 12% annual returns on fixed savings, outpacing traditional banks’ 11.19% three-month deposit rates [1].

Traditional banks, including First Bank and Access Bank, maintain dominance through extensive physical infrastructure, legacy customer bases, and institutional trust. First Bank serves 42 million customers via over 500 branches and 233,500 agent outlets, while Access Bank holds $24.9 billion in assets as of Q1 2025 [2]. These institutions also cater to corporate and SME segments, with Zenith Bank’s ALAT app onboarding 250,000 customers in its first year. Despite neobanks’ agility, traditional banks retain a larger share of consumer trust—72% in commercial banks versus 41% in digital-only banks—due to historical reliability and familiarity [3].

Regulatory developments, such as the Central Bank’s licensing of digital-only microfinance banks, aim to bridge gaps in financial inclusion. However, challenges persist: Nigeria’s 39% formal banking penetration and rising cybercrime ranks (fifth globally in 2024) highlight vulnerabilities in digital systems. Kuda’s Musty Mustapha has emphasized the need for industry-wide security standards, including multi-factor authentication and real-time fraud detection, to address phishing and insider threats [4].

Analysts project neobanks will expand into insurance, investment, and AI-driven tools to broaden appeal, while traditional banks may adopt zero-trust architectures for enhanced security. Both models face opportunities in hybrid approaches—neobanks could bolster trust through transparent policies, and traditional banks might integrate digital advisory services while maintaining physical presence. Regulatory clarity and financial literacy campaigns will likely shape the sector’s trajectory [5].

The Nigerian banking system’s active account count reached 311.65 million by December 2024, underscoring a transformative shift driven by smartphone penetration and digital innovation. While neobanks capture tech-savvy urban users, traditional banks leverage trust and infrastructure to serve broader demographics. The outcome of this competition hinges on balancing agility with credibility, as both models adapt to evolving consumer demands and regulatory frameworks.

Source: [1] [Neobanks vs. Traditional Banks in Nigeria: Who is winning?](https://coinmarketcap.com/community/articles/68831e86b0543364aa5f6458/) [2] [Neobanks vs. Traditional Banks in Nigeria: Who is winning?](https://coinmarketcap.com/community/articles/68831e86b0543364aa5f6458/) [3] [Neobanks vs. Traditional Banks in Nigeria: Who is winning?](https://coinmarketcap.com/community/articles/68831e86b0543364aa5f6458/) [4] [Neobanks vs. Traditional Banks in Nigeria: Who is winning?](https://coinmarketcap.com/community/articles/68831e86b0543364aa5f6458/) [5] [Neobanks vs. Traditional Banks in Nigeria: Who is winning?](https://coinmarketcap.com/community/articles/68831e86b0543364aa5f6458/)