Competitive tensions between banks and mobile-based fintechs as drivers of service pricing and access in Nigeria

Walk into any banking hall in Lagos today and you can feel the quiet pressure in the system. People still want a place to keep money safe, but they also want speed, clear pricing, and fewer surprises. That is why a trader checking a pips calculator on a phone can end up using the same device to send rent, pay a driver, top up airtime, and move money to family in another state, without stepping near a counter. In Nigeria, the most important fight in financial services is no longer only about who has the biggest branch network. It is about who controls the daily payment habit, and how that battle is reshaping charges, access, and trust.

For years, banks set the rules. They owned the accounts, the cards, and the rails behind most transfers. But mobile-based fintechs changed what Nigerians now expect. A good app, fast onboarding, agent cash-in points, and instant alerts can make a younger customer feel like a bank is “too slow” even when the bank is stable and regulated. As fintechs scaled, banks responded with their own apps, better user interfaces, and more digital products. The result is competition that benefits customers in one way, and squeezes them in another: pricing is under pressure, yet new fees keep showing up because everyone in the chain wants a share of a growing digital economy.

One clear example is the cost of transferring money. Nigeria’s instant transfer culture runs heavily on NIBSS Instant Payment, the infrastructure that connects banks and many other licensed players. The numbers show how central it has become: the Central Bank has reported multi-trillion naira values moving through NIP in just half-year periods, with volumes in the billions of transactions. When a system becomes that large, even a small per-transaction charge becomes a serious revenue line. Banks have long relied on these tiny fees at scale, while fintechs used aggressive pricing, promos, and smoother experiences to pull users away. That tug-of-war pushes everyone to rethink what fees should look like, and who should pay them.

Now add policy and taxation into the mix. From January 1, 2026, Nigerian banks began applying a ₦50 stamp duty on electronic transfers of ₦10,000 and above, shifting the burden more clearly to senders for many everyday transfers. Whether a customer sends money through a bank app or another channel that touches regulated rails, the wider environment is telling Nigerians that digital convenience may still come with compulsory deductions. This is where the tension gets sharper: fintechs often sell the idea of “cheaper and simpler,” but when government levies and industry-wide rules bite, the price difference narrows and customers start comparing reliability and dispute resolution, not just the fee.

USSD is another battleground, and it matters because it is still the bridge for millions of people who are not fully smartphone-native or who simply want a quick, low-data option. In 2025, Nigeria migrated more decisively to an end-user billing model for USSD banking, with a widely reported session price of ₦6.98 per 120 seconds and charges taken from airtime after user consent. That change sounds technical, but it touches real life: it moves part of the cost debate away from banks and into telecom billing, and it changes how customers “feel” charges. A bank transfer fee deducted from an account can look like bank greed. An airtime deduction can look like telecom exploitation. Meanwhile, the customer is the one paying either way. Competition does not remove the charge; it often just changes the wrapper around it.

Access is where fintechs have landed their strongest punch. Traditional banks still dominate large-ticket corporate finance, trade services, and many salary accounts. But mobile-based players expanded reach through agent networks and lighter onboarding, helping people in busy markets and semi-urban communities transact without needing a branch nearby. Banks have responded by strengthening agency banking and partnering more with payment agents, but the relationship is complicated. Agents can be loyal to whichever platform gives better uptime, faster settlement, and fewer reversals. If a fintech service is more stable during peak periods, the agent will push customers that way. If a bank’s system is more dependable for high-value transfers or complaints, customers drift back. In practice, Nigerians now “multi-bank” and “multi-wallet” at the same time, spreading risk and chasing convenience.

Regulation also shapes the rivalry. The Central Bank has been tightening the wider payments environment, not only to modernize it but to reduce fraud and improve oversight. Cash management rules that take effect from January 1, 2026 introduce stricter weekly withdrawal limits and extra charges for cash withdrawals above set thresholds. That kind of policy nudges more people into digital channels, which should benefit both banks and fintechs. But it also raises the stakes: if digital becomes less optional, consumers become less tolerant of failed transfers, delayed reversals, and weak customer support. In that environment, competition is not just about price. It becomes about credibility under stress.

Banks, on their side, are dealing with major balance-sheet demands and higher compliance expectations. The recapitalisation programme announced by the Central Bank raised minimum capital requirements, with international commercial banks expected to meet a much higher capital base within a defined period. That forces banks to focus on funding, risk control, and profitability. When margins are squeezed, banks look harder at fee income. Fintechs, meanwhile, face their own compliance costs, licensing expectations, and scrutiny around advertising and consumer protection. So the contest becomes a kind of double squeeze: customers want lower costs, regulators want stronger controls, and providers want sustainable revenue.

What does all of this mean for service pricing and access in Nigeria? It means the era of “free forever” is fading, but the era of “pay anything quietly” is also fading. Competition is forcing clearer pricing, faster innovation, and wider reach. Yet it is also producing a constant stream of fee redesigns: who pays, when they pay, and how the charge is described. For everyday Nigerians, the best outcome is not simply cheaper transfers. It is predictable charges, quick dispute resolution, and dependable rails that work on bad network days, on salary days, and during public holidays. The bank–fintech tension will keep driving change, but the winners will be the players who treat trust like the real currency and make access feel normal, not like a privilege that comes with hidden costs.