Neobanks in Nigeria: Key Considerations for Market Entry - Part I

For global Neobanks considering expansion into Africa, Nigeria presents a compelling opportunity. Through this two-part Neobanking Series, we examine some of the strategic and regulatory dimensions of Neobank expansion into Nigeria. In Part 1, we explore some of the strategic considerations that make Nigeria a compelling destination for global Neobanks. In Part 2, we will focus on some of the key legal and regulatory considerations governing market entry, licensing, and operational compliance.

Neobanks - The Future of Banking

Neobanks are digital-first financial platforms offering a variety of services, ranging from multi-currency accounts and payments to cards and investing solutions. Neobanks are undoubtedly reshaping global banking and for global Neobanks considering expansion into Africa, Nigeria presents a particularly compelling opportunity. With a population exceeding 220 million, growing smartphone adoption, and a dynamic fintech ecosystem, the domestic market is primed for digital banking disruption.

Equally significant is Nigeria’s large diaspora, estimated at over 17 million Nigerians living abroad, primarily in the UK, US, Canada, Asia and Europe. We believe this diaspora represents a high-value market for not just localized financial services but also for a variety of cross-border financial services, including:

1. Remittances: Nigerian diaspora send billions annually back home, creating demand for fast, low-cost, and reliable transfers.

2. Multi-currency accounts: Diaspora users require banking solutions that operate seamlessly in both Nigeria and their resident countries.

3. Investment & wealth management: Nigerians abroad often seek investment opportunities in local and international markets.

4. Cross-border payments & merchant services: Businesses serving diaspora customers often need integrated solutions for payments in multiple currencies. 

5. Support for venture-backed startups expanding globally: Such companies frequently require sophisticated banking services abroad, which many local banks are currently unable or hesitant to provide.

At the same time, Nigeria’s traditional banking system appears ripe for “neobanking” innovation in many respects. In most banks, opening an account still requires customers to visit a physical branch, fill out lengthy paper forms, and provide hard copies of identification and utility bills. Basic updates, such as changing account details, resolving card issues, or accessing certain types of statements, often require in-person visits or phone calls during working hours. Many banks continue to rely on legacy infrastructure that limits interoperability and delays payment processing, while user interfaces on mobile and internet banking platforms often remain clunky.

In addition, the sector has been slow to embrace the full promise of open banking. Although the Central Bank of Nigeria issued operational guidelines for Open Banking in March 2023 and subsequently approved the launch of the open banking framework for August 2025,  the full open banking ecosystem is yet to fully materialize.  This lag means many traditional banks still operate in relatively closed systems, limiting their ability to participate in the data-driven, customer-centric innovations that open banking enables. As regulatory reforms such as the open banking framework gain traction, we believe that the competitive edge will belong to institutions capable of combining regulatory compliance with innovation, convenience, and customer experience

Together, these pain points undoubtedly highlight an opportunity for innovative financial institutions and Neobanks to herald banking innovations and features that align with the expectations of a digital-first generation. By addressing both domestic and diaspora markets, Neobanks can also tap into complementary segments, significantly expanding its user base and transaction volume.

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In Part 2 of this series, we discuss some of the key legal and regulatory considerations relevant to a Neobank’s entry into the Nigerian market.

This publication is based on the authors' independent analysis, observations, and experience advising clients on regulatory and compliance matters. It is provided solely for informational purposes. The views expressed herein do not constitute legal advice or an official recommendation, nor do they represent the position of any institution or client. Readers should seek specific professional advice before relying on any part of this publication.