Union Bank Pushes Inclusive Banking Model to Capture Nigeria’s Informal Economy

Union Bank Pushes Inclusive Banking Model to Capture Nigeria’s Informal Economy

As Nigeria’s economic landscape continues to evolve beyond traditional structures, Union Bank of Nigeria is positioning itself at the forefront of efforts to bridge the long-standing gap between formal banking services and the country’s vast informal sector.

Historically, Nigeria’s banking system has been tailored to serve salaried professionals, corporate entities, and customers with verifiable income streams and collateral. While effective for this segment, the model has left a significant portion of the economy—comprising small traders, cooperatives, artisans, and agro-based businesses—largely underserved.

This informal and semi-formal sector, which includes market women, small-scale manufacturers, and seasonal entrepreneurs, represents a substantial share of Nigeria’s productive economy. Yet, many operators lack access to credit due to the rigid requirements of conventional banking systems.

According to data from the Enhancing Financial Innovation & Access (EFInA), about 26 per cent of Nigerian adults remain financially excluded. Similarly, surveys by the World Bank identify limited access to finance as a major constraint for small and medium-sized enterprises, particularly those operating outside formal structures.

In response, Union Bank has introduced targeted solutions aimed at addressing these structural gaps. Central to this effort is alpher, the bank’s financial proposition designed to support underserved segments by offering tailored financial products and services.

Through the initiative, the bank disbursed over ₦150 million in cash flow-based loans to entrepreneurs within a three-month period in 2025. Unlike traditional credit systems, alpher leverages alternative underwriting models that account for cooperative contributions, market association networks, and informal cash flow patterns.

The bank also extended more than ₦106 million in discounted credit to 71 businesses operating within market clusters previously excluded from formal banking access. In addition, its financial literacy programmes reached over 230 individuals, while 59 unbanked entrepreneurs benefited from micro-grants and newly opened accounts.

Industry analysts note that the significance of these interventions lies not just in the scale of funding, but in the shift in banking approach—moving from rigid product structures to adaptable models designed around real economic behaviour.

Union Bank’s inclusion strategy is further reinforced by its internal governance and workforce policies. The bank reports that 45 per cent of its board members are women, surpassing the benchmark set by the Central Bank of Nigeria.

Under the leadership of its Managing Director and Chief Executive Officer, Yetunde B. Oni, the institution has also implemented policies such as extended maternity leave, paternity leave, and workplace childcare support, reflecting a broader commitment to inclusion.

Experts argue that Nigeria’s banking sector still has significant ground to cover in effectively serving the informal economy, which remains the largest segment of economic activity in the country. They stress that scaling financial inclusion will require more institutions to rethink product design, risk assessment, and customer engagement models.

As Union Bank marks over a century of operations since its establishment in 1917, its evolving strategy highlights a broader shift within the financial services industry—one that prioritises adaptability and inclusiveness in response to Nigeria’s diverse and dynamic economic realities.

Analysts maintain that banks capable of aligning their services with the realities of informal and emerging sectors will be better positioned for long-term relevance in Nigeria’s rapidly changing economy.