INTERVIEW: Why non-interest banking is gaining ground in inflation-hit Nigeria, by Akinlabi Adegoke

Akinlabi Adegoke, Chief Digital Officer at Lotus Bank, reflects on the shifts reshaping Nigeria’s financial services sector — from subsidy removal and naira devaluation to the growing demand for simpler, fairer banking models.

In this interview with Daily Times’ Awwal Owolabi, he discusses the rise of non-interest banking, the balance between stability and innovation, and why Nigerians now prioritise trust, transparency, and affordability in their daily financial choices.

Daily Times: Nigeria’s economy has gone through major shifts in the past two years — from subsidy removal to naira devaluation and rising inflation. How are these changes shaping the financial landscape for banks like yours?

Akinlabi: You are right when you mentioned what the Nigerian economy has gone through in the past few years, and that’s very tough in the livelihood of Nigerians—there is a high cost of living, from transportation to fuel, to imports. 

All of these have become more expensive. There is pressure on the Naira… Whatever you earn now, you can only do a little with it, compared to what you would have done before. There is also a trust gap that a lot of people have with banks and in finance.

Opportunities for non-interest banks would be first to let the larger population understand the principles and what our banking model offers them in terms of non-interest financial institutions, which allows for customers to access finance in a way that is straightforward, isn’t complex, isn’t compounding, and is asset-backed. 

Globally, you will find that loans that are asset-backed perform; that customers who are supported by asset-backed, that would usually be able to turn those funds around and be able to contribute meaningfully to the development of their lives and of the economy as well.

So, in a very volatile currency environment like ours, customers would want…tied to specific goods and services that we have. Some lending models, such as our Murhabaha, which is a cost-plus-profit model, and our Hijar, which is a lease arrangement. This arrangement provides certainty and avoids hidden compounding interest, unlike what you typically find with conventional banks.

Another one is clarity of cost. With inflation and the FX swings you have referenced in your introduction, customers would not want to see more surprises from their banks in terms of additional interest. 

This affects SMEs, who are the backbone of the economy, and so with non-interest commercial institutions, SMEs and corporate clients are able to know the profits that the bank would charge from the beginning of the transactions. 

Daily Times: From your vantage point as a digital bank MD, what do you see as the single biggest force reshaping financial services in Nigeria today?

Akinlabi: I think it’s the pressure to make finance affordable and accessible in real life, beyond just talking about it or writing about it. As we mentioned earlier, the removal of subsidies, naira devaluation, and rising costs mean that people cannot afford higher fees, hidden charges, or products that they don’t even understand. 

This pressure is forcing banks and fintechs to rethink their models, simplify digital tools and build trust through clarity. 

Many people are still excluded. Clarity can only be built when there is trust, and people need to understand that, irrespective of their capacity to afford a smartphone or not, they have access to their money and access to financing. They have access to the economy with their other phones. Where things like USSD or apps that don’t require internet connectivity for them to carry out basic transactions.

Also, expansion would be driven when there’s affordability, reliability, and trust in a high-risk environment. Clear terms matter more than any shiny app anyone will build, and our non-interest services stand out because the cost of all the financing that is ever done is fixed.

And, of course, inclusion, when the cash-trunk incident occurred a few years ago, we saw the highest drive for financial inclusion in the country. 

Almost all artisans now use the fintech apps, Opay and co, because they are built with the client in mind, with clarity. They made the process simple, it was convenient, and that’s what drives our financial industry—accessibility, affordability and convenience for the customers. Whoever meets the needs of the customers will lead the market.

Daily Times: Digital banks are often described as disruptors. Do you see your role more as a disruptor or as a bridge between traditional banking and the future?

Akinlabi: I see my role more as a bridge than a disrupter. Nigeria needs both stability and innovation simultaneously. Traditional banking is deeply ingrained in our system. It has built trust. 

It has compliance and reach. Digital brings speed and affordability. My job as a digital officer is to connect the two, allowing customers to get the best of both worlds without compromising trust or access. 

So, I’m helping build systems rather than tearing them down. For example, bringing cards, POS, USSD, and agent banking into one field, but still backed by licensed banks. Today, the banks have to support all of the digital platforms and digital products.

We are not knocking off traditional banks entirely. Old models block inclusion because customers might need to go to physical branch locations to open accounts to start their journey with us but today, through digital platforms, account opening is possible in minutes using mobile or USSD as against doing that from a branch location. So, it serves as a bridge in ensuring that customers are able to get a great balance between traditional and digital banks. 

And it’s not a contest, it’s simply appreciating how services are delivered and ensuring trust and compliance from the old world and reach and availability from the new. In summary, I’m not tearing down any walls, I’m widing the doors and my role as CDO is to connect the strength of traditional banking with the reach of digital tools so finance can work for every Nigerian, every day.

Daily Times: What key consumer behaviours are you observing right now that show Nigerians are adapting to this new economic reality?

Akinlabi: Nigerians are adapting by going smaller, faster and clearer in terms of the value that they require. They are using digital for very small payments. They pool money together and look for fixed predictable cost. People are not resisting the change as much. Nigerians are able to take on almost anything but they are shaping it to fit their daily survival. Example of this is value-sensitivity.

Nigerians are watching every field, they move quickly to platforms with lower or no fees at all, transparent fees, preferably even if the service difference is small like Opay, Palmpay, Moniepoint, who pays customers when they carry out bills payment. 

For 100-naira airtime on Opay, you most likely pay 80 naira, so there is value sensitivity. People are watching every kobo and being very sensitive about where their money is going and for what purpose and where they can get it cheaper as long as it is stable and the offer is not inferior to what they are currently getting.

Small ticket digital use: a lot of people are doing small ticket transaction leveraging USSD that prior to now, used to be all cash. So, you would see USSD transactions for as low as 200-naira, 500 naira. POS is also now part of the peoples’ daily lives with a big decline in part of ATM patronage by Nigerians. People rely on nearby POS agents for withdrawal and deposit and it shows convenience.

I’ll make an argument that that might not be cheaper because it is cheaper to get money from the ATM than POS depending on the location but people prefer the latter for convenience’s sake. There is also a rise of shared accounts and also in Esusu or ajo. 

Fintechs have started to build products to allow family, cooperatives, to put money together and share in the struggle together rather than one person struggling alone. There is increase in digital trust as well. A lot of people who were excluded before during covid are now fully included and would rather take payments in their accounts rather than cash as they would before 2020.

Daily Times: You’ve argued that stability now matters more than innovation. What specific consumer behaviours or usage data convince you of this shift?

Akinlabi: A lot of merchants today who had POS terminals from merchants from a trust standpoint still come back to banks to say, “I’d rather a bank that has digital footprints, that has physical locations that I can see and can be sure of stable transaction flow with than a fintech that is on for sometime and delivers epileptic services” and that tells us that stability is more important than all of the innovations that some fintechs are putting on the table for the clients. 

We have seen that in the behaviours of merchants with terminals, a lot of them are in this category. We have also seen that in the fact that people who have those fintech accounts use them for small ticket transactions. For their big tickets, a lot of them would prefer to use their standard bank, which supports the argument being made around stability.

Daily Times: In a market where Nigerians value dependability, how do you balance the pressure to innovate with the responsibility to be consistent and reliable?

Akinlabi: Innovation in banking cannot come at the expense of trust. For me, the real test of digital banking is not how quickly we can launch new features, but how consistently those features work when customers need them most. We balance this by innovating with purpose: ensuring every new tool is rigorously tested, built on secure infrastructure, and designed to solve a real customer problem. Nigerians value stability, so reliability is non-negotiable. Innovation only succeeds when it is anchored on trust.

Daily Times: Since the removal of subsidies and the devaluation of the naira, Nigerians have become more price-sensitive. How has this shaped the way customers interact with digital banking products?

Akinlabi: We’ve seen customers become more deliberate about value. They are looking for banking solutions that help them stretch every naira, whether through lower transaction costs, faster access to funds, or features that help them budget and save. 

Convenience remains important, but affordability is now central. As a result, digital banking has had to adapt by becoming not just a channel of convenience but also a partner in financial discipline.

Daily Times: What unique advantages does non-interest banking provide in today’s climate of high inflation and volatile FX?

Akinlabi: Non-interest banking is built on principles of fairness, transparency, and risk-sharing. In an inflationary and volatile environment, these principles provide stability. Customers benefit from products that are not debt-driven, but rather asset-backed, meaning less exposure to speculative risks. 

It also encourages more responsible borrowing and investment because transactions are tied to real economic activity. This makes non-interest banking particularly attractive to customers seeking ethical, predictable, and sustainable financial solutions in uncertain times.

Daily Times: With POS terminals dominating everyday transactions, how do you see digital banks competing or complementing this shift?

Akinlabi: The idea of agency banking started from banks. It is a shared journey between banks and fintechs. The POS you see do not only belong to fintechs, they belong to both banks. Today, at Lotus Bank, we have issued over 17,000 POS terminals to agents and merchants. 

There are banks in the industry that have issued way more than that and some with a little lesser. Beyond what the banks are doing, the Moniepoint of this world, the Opay, Palmpay, who have quite a number of distributions in terms of terminals, banks also do have a lot. POS is the face of finance on the street but it’s only one part of the journey.

Digital banks compliment POS, agent banking. Behind those terminals, there is account creation, there is settlement, there is savings, there is credit, value-added services that extends beyond regular cash in, cash out and digital banks are powering this. While POS agents can take payments, it is the digital banks that ensure same day and instant settlements into accounts which is what builds trust for both the merchants and customers.

Onboarding and customer acquisition as well where POS agents will bring the people in, they will need digital banks to open the account on the spot through either the USSD or through those agents’ app they are using which will then make the customer fully banked because at the heart of all we are doing, inclusion is the key.

Beyond cash out, many people use those agents for much more. Digital banks push the agents and POS to do much more: bills payment, savings, esusu, micro loans, zakat payment (in Islamic bank context), and takkaful insurance, all of these are being layered on what agents are doing with their terminals which are all powered by digital banks. 

POS transaction data is data that is critical to the banks to use in taking decisions. We can get a lot of data from that, we can get a lot of insight from that for curating savings offers, credit and personalized services all of which agents alone cannot do.

While an agent is available next to you to give cash in cash out when needed, it is just the beginning of an entire journey where your cards are then issued to you, savings offers and financing loan offers. And based off that data, digital banks use those agents as a channel by which those services are offered.

Daily Times: Looking ahead to 2026, what kinds of financial services will matter most to everyday Nigerians?

Akinlabi: By 2026, everyday Nigerians will prioritise services that improve their daily lives in practical ways. This includes access to affordable credit for small businesses, savings and investment tools that protect against inflation, and frictionless payment systems that make commerce faster and cheaper. 

We’ll also see greater demand for personalised financial management tools, digital solutions that help people plan, save, and spend smarter. In short, financial services will matter most when they are simple, transparent, and directly improve household resilience.

Daily Times: If you had one policy wish from government or regulators to accelerate digital banking growth, what would it be?

Akinlabi:  I would wish for a unified national digital identity system that is seamlessly integrated into financial services. Identity remains the backbone of secure and inclusive digital banking. 

If every Nigerian could be reliably identified with one secure system, it would reduce fraud, simplify KYC processes, and lower the cost of onboarding millions of unbanked citizens. This single step would accelerate digital banking growth far more than any individual innovation could.