Could religious institutions be major drivers of financial inclusion? This new report seems to suggest so

Nigeria is a largely religious society and one where citizens depend on religious social structures, it is not surprising that the study seems to suggest such an approach.

The study identified broader community engagement, including with religious institutions and social groups, as essential to driving financial inclusion in Nigeria.

The study also identified the need for more unconventional means of on-boarding financially excluded persons (i.e., people without bank accounts and no access to digital financial services) such as the use of livestock ownership as collateral for financing.

Oftentimes, financially excluded people are referred to with a broad stroke without much regard for their melange of circumstances.

To better help all stakeholders -- financial service providers, researchers, the media, etc. -- understand the complexity of financial exclusion, the study dived deep and provided psychometric profiles of this group, dividing them into six segments (which are by no means exhaustive or indicative of the entire population).

The six customer segments of financially excluded persons are:

1. Vulnerable Believers, which form 12% of the population

2. Resilient savers, 21% of the population

3. Dependent individualists, 22% of the population

4. Digital youth, 19% of the population

5. Confident optimists, 14% of the population

6. Sceptical cultivators, 12%of the population

About the report, Dr Olayinka David-West, Academic Director and Senior Fellow at the Lagos Business School, said, “One of the many challenges of Financial Service Providers (FSPs) is limited knowledge of customers, and as a result they often overlook high potential customers or misidentify their needs, and invest in products and channels that sometimes miss the mark.

“The customer segments presented in this study provide insights into the behavioural and attitudinal traits of the Bottom of the Pyramid (BoP) population, currently estimated at 75% of Nigeria’s population (about 135 million persons), with a view to providing FSPs with correct information to create fit-for-use, segment-aligned digital financial products,” she added.

The research study is the most representative of Nigerians with a sample size of 1,200 across the country. The study integrated three variable types into its segmentation approach to expand information about BoP consumers, strengthening typical approaches to segmentation.

Partner at Dalberg and its Nigeria director, Nneka Eze said, “As with all the countries, the Nigeria report introduces a novel approach to segmentation that integrates contextual, behavioural, and psychometric variables that is useful in identifying patterns, highlighting nuances and differences between people that may not be clear from their contexts alone. Overlaying a segmentation using behavioural and psychometric approaches with FSPs’ existing segmentation strategies, we identified opportunities to drive market share— reaching people that a broad demographic approach to the market may not reach or energise.”

The full report is available online here.

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