1. 1  Background of the Study

        Financial inclusion is the accessibility of financial services to everyone in a just, transparent, and unbiased manner at a reasonable cost. It also pertains to the provision of essential banking services to all segments of society at an affordable price. Essentially, these definitions encapsulate the concept of involving all citizens of a country in official financial transactions. This integration of citizens into the financial mainstream is anticipated to drive investments, generate employment, and stimulate economic growth (Usman, 2020).

In Nigeria, the government, in collaboration with the Central Bank of Nigeria, has taken steps to achieve financial inclusion as a crucial component of fostering sustainable and comprehensive development. This has been pursued by formulating policies aimed at facilitating widespread access to affordable financial services, particularly for marginalized and vulnerable groups (Olatunji, 2015).

The commitment of the Central Bank of Nigeria to financial inclusion was demonstrated through its comprehensive strategy developed in 2012, with the objective of reducing the percentage of adults without bank accounts in Nigeria. The target was to lower this percentage from 46.3% in 2010 to 20.0% by 2020, thereby increasing the proportion of the population with financial service access from 30.0% to 70.0% within the same timeframe. These policies and mechanisms underline Nigeria's resolve to halve the population of those without banking access by 2020, with the purpose of extending services like payments, savings, loans, insurance, and pensions to a broader audience (Nmadu and Mika’ilu, 2018).

These dedicated endeavors have been aimed at reducing the count of individuals excluded from the formal financial system, with the goal of integrating a larger portion of the population into structured financial activities. These efforts have been further empowered by the incorporation of technological innovations within the financial sector.

        Financial technology, often referred to as fintech, encompasses the innovative technological advancements within financial services. Fintech plays a crucial role in this integration process, encompassing emerging technologies that reshape traditional financial transactions. It encompasses a range of software and contemporary technologies employed by businesses to optimize and elevate the delivery of financial services. These technological strides hold the potential to dismantle barriers to financial service accessibility, promote increased utilization of banking services, and ultimately contribute to the overall economic advancement of a nation (Asian Development Bank, 2016).

Nonetheless, the challenge of achieving comprehensive financial inclusion remains formidable. Currently, a staggering 2.3 billion adults globally lack the means to access financial services, while 1.7 billion individuals are categorized as having limited access to banking services.

This issue is particularly stark in developing economies like Nigeria, where over 60% of the population remains outside the purview of formal banking services (Global Finance, 2021). This isn't unexpected, considering the consistent growth of currency circulation outside the formal banking system. The year-on-year expansion of currency outside the banking system surged by more than 50% between 2015 and 2020, escalating from 1.46 trillion naira to 2.3 trillion naira respectively. This led to a shift in the annual growth rate from 12% in 2016 to 25% in 2020 (Central Bank of Nigeria, 2021).

Driven by the impacts of currency depreciation in both 2016 and 2020, which contributed to rising inflation, a significant portion of Nigerians have become further distanced from financial inclusion services. The pursuit of digital currency or digital finance represents an endeavor to revamp the financial system into one that is more accessible and inclusive for citizens.

As demonstrated by Yuhelson et al. (2020), the adoption of digital currency facilitated by authorized e-cash providers holds the potential to expand access and participation in financially inclusive activities across borders. A notable example is India, where the growth rate of formal financial users soared from 52.8% to 79.8% between 2014 and 2018 as a result of digital financial transactions (Mobile Solutions Technical Assistance and Research (mSTAR), 2019).

        Furthermore, the pursuit of digital currency aligns closely with the global ambition to alleviate poverty and propel sustainable development. The United Nations has outlined ambitious targets for eradicating poverty, a mission that has gained heightened urgency due to the detrimental impact of the COVID-19 pandemic on poverty levels. Nevertheless, the potential of digital currency to expedite economic recovery and uplift those in poverty is substantial, as it can facilitate increased access to financial resources for marginalized communities.


In this context, the emphasis on the development of digital currency as a means to enhance financial inclusion becomes paramount. The correlation between financial inclusion and economic growth is evident, given that economies exhibiting higher levels of financial inclusion typically experience augmented economic expansion. Enabling small and medium-sized businesses to access financial services empowers them to make well-timed business decisions and respond more effectively to market demands, ultimately fostering economic well-being. Despite the significance of this interrelation, Nigeria lags behind other developing nations in terms of ATM penetration (Ekong and Ekong, 2022).


In 2021, Nigeria's ATM penetration per thousand declined to 16.9%, in contrast to its counterparts in Africa, notably Morocco (28.6%) and Egypt (20.1%), as well as other regions worldwide, including Brazil (101.7%), Indonesia (53.3%), and India (21.0%) (Global Finance, 2021). There remains a considerable gap in the advancement of financial inclusion in Nigeria, and exploring the role of digital finances in bridging this gap is of paramount importance. Intriguingly, discussions on digital finances have emerged quite recently, and empirical exploration of their impact on financial inclusion is also limited, particularly in the context of developing economies such as Nigeria.

Opay, a prominent fintech company in Nigeria, has gained attention for its efforts in leveraging technology to provide financial services to the unbanked population. Thus this study seeks to to analyze how Opay, through its technological initiatives, has contributed to deepening the financial inclusion of unbanked Nigerians.


1.2 Statement of the Problem

        The advent of financial technology, often referred to as fintech, has significantly transformed the landscape of financial services delivery, enhancing security and convenience in handling cash (Villasenor  et al., 2015). However, while the positive impact of technology on the quality of financial services is acknowledged, its influence on financial inclusion remains a subject requiring comprehensive investigation. Despite considerable efforts by the Nigerian government and financial institutions to promote financial inclusion through both policy interventions and technological advancements, persistent challenges continue to hinder progress.

The unbanked population poses a significant barrier to Nigeria's economic advancement, constraining access to financial resources, obstructing entrepreneurial endeavors, and amplifying income inequality. The reliance on traditional cash transactions, coupled with restricted entry to formal banking services, accentuates the urgency for innovative and transformative solutions.

In response to these challenges, Opay, a prominent fintech company in Nigeria, has taken center stage by leveraging technological innovations to bridge the gap between financial services and the unbanked population. This study aims to investigate how Opay's technological initiatives have contributed to deepening the financial inclusion of unbanked Nigerians.

As the global spotlight intensifies on financial inclusion as a pivotal component of economic development, the need to address barriers impeding access to formal banking services becomes more apparent. The role of financial technology in facilitating financial inclusion, particularly in developing economies, becomes a critical focal point for researchers seeking to understand its potential impact (Usman, 2020).

While studies like Radcliffe and Voorhies (2012), Nyamongo and Ndirangu (2013), McKee et al., (2015), and Fanta and Makina (2019) highlight the positive influence of financial technology in expanding access to savings, credit, and insurance products, and improving overall financial inclusion, contrasting viewpoints also emerge. Arenaza (2019) contends that the intricate interplay of different stakeholders and regulatory conditions in technology-enabled financial services can complicate their role in fostering inclusion.

Similarly, Buckley and Malady (2015) suggest that limitations in adopting and utilizing financial technology in developing markets can constrain its impact on financial inclusion. The World Bank (2020) underscores the necessity for a robust foundation of reliable and productive infrastructures to ensure user-friendly, secure, and cost-effective financial technology services, a foundation often lacking in many developing economies.

Amidst this discourse, the potential of financial technology to amplify the scope of inclusion and integration in developing economies remains promising, yet its comprehensive impact necessitates thorough validation. Moreover, the rapidly evolving nature of technology calls for continuous reevaluation to ensure the relevance of empirical evidence.

In light of these complexities and evolving perspectives, this study focuses on analyzing Opay's initiatives as a case study, aiming to shed light on the effectiveness of technology-driven financial solutions in achieving deepened financial inclusion among the unbanked Nigerians.


1.3 Aim of the Study

The primary aim of this study is to analyze how Opay, through its technological initiatives, has contributed to deepening the financial inclusion of unbanked Nigerians.


1.4 Objectives of the Study

This study seeks to achieve the following objectives:

  1. To assess the technological strategies employed by Opay to extend financial services to the unbanked population.
  2. To evaluate the impact of Opay's initiatives on unbanked Nigerians' access to savings and other financial instruments.
  3. To analyze how Opay's credit and lending services have supported the growth of unbanked individuals' entrepreneurial endeavors.
  4. To examine the role of Opay's technology-driven solutions in providing a secure and convenient payment system for the unbanked.


1.5 Research Questions

To guide the study, the following research questions will be addressed:

  1. What technological approaches has Opay employed to extend financial services to the unbanked population in Nigeria?
  2. How has Opay's intervention impacted the accessibility of savings and other financial instruments for the unbanked Nigerians?
  3. In what ways have Opay's credit and lending services contributed to the growth of unbanked individuals' entrepreneurial activities?
  4. How has Opay's technology-driven payment system enhanced security and convenience for the unbanked population?


1.6 Research Hypothesis

H0: Opay's technological interventions significantly contribute to deepening the financial inclusion of unbanked Nigerians.

Ha: Opay's technological interventions significantly contribute to deepening the financial inclusion of unbanked Nigerians.



1.7 Justification of the Study

This study's significance lies in its potential to provide insights into the effectiveness of technology-based solutions in addressing financial inclusion challenges in Nigeria. By analyzing Opay's case, policymakers, financial institutions, researchers, and other stakeholders can gain valuable insights into the strategies that can be adopted to promote financial inclusion among the unbanked population.


1.8 Scope of the Study

This study focuses specifically on Opay as a case study for exploring how technology has been utilized to deepen financial inclusion among unbanked Nigerians.