Fintech-backed lender targets underserved businesses with data-driven lending model as competition intensifies for Nigeria’s SME market
Nombank, the regulated banking subsidiary of Nigerian fintech company Nomba, is positioning itself to capture a larger share of Nigeria’s small and medium-sized enterprise (SME) banking market by leveraging merchant transaction data to provide faster access to credit and banking services for businesses traditionally excluded from conventional lending.
The strategy reflects a growing shift in Nigeria’s financial services industry, where digital banks and fintech firms are increasingly using technology and real-time business data to address longstanding financing gaps affecting millions of small businesses.
Unlike traditional lending models that rely heavily on collateral, audited financial statements and extensive documentation, Nombank says it assesses merchants’ financial health through transaction data generated on Nomba’s payment platform, allowing it to make lending decisions based on actual business activity.
Managing Director of Nombank, Seun Osunkeye, said the approach is designed to address one of the biggest structural challenges facing Nigeria’s SME sector—limited access to formal credit despite the commercial viability of many businesses.
“My interest in this space goes back to my undergraduate thesis, where I examined how microfinance banks support SMEs and how access to capital determines whether a small business survives or grows,” Osunkeye said.
“Working closely with merchants at Nomba reinforced what I had seen years earlier. Many SMEs are viable businesses but remain locked out of the formal financial system because financial products were never designed around how they actually operate.”
Nombank emerged after Nomba acquired a microfinance banking licence, enabling the fintech company to mobilise deposits and extend credit through a regulated banking institution rather than depending solely on third-party banking partners.
According to Osunkeye, the bank’s initial objective was to build financial infrastructure to support Nomba’s payments ecosystem. However, he said the institution has since evolved into an independent banking business with its own customer segment and value proposition. “We no longer see Nombank purely as infrastructure sitting underneath Nomba,” he said. “We see it as a distinct banking business with its own customer segment and value proposition.”
Central to that strategy is the growing volume of merchant transaction data generated across Nomba’s network. According to the bank, transaction volumes processed daily increased from approximately ₦7 billion in May 2025 to about ₦250 billion in May 2026, providing a significantly larger data pool for assessing merchants’ business performance and creditworthiness.
Osunkeye explained that transaction histories provide deeper insights into cash flow patterns, seasonal business cycles and operational performance than many traditional credit assessment models. “Our advantage is data,” he said. “A banking licence is something others can obtain. The institutional trust and years of transaction data built from serving merchants are much harder to replicate.”
Rather than requiring lengthy documentation before approving loans, Nombank uses transaction records to evaluate businesses in near real time and structure credit facilities around actual working capital requirements.
“Traditional lenders typically ask for audited financial statements, physical collateral and extensive documentation,” he said. “Because we already understand how many of these businesses operate through their transaction data, we can assess credit in near real time and structure facilities around their actual working capital cycles.”
Beyond direct lending, the bank is also expanding into embedded finance, enabling businesses to integrate regulated banking services – including collections, savings and credit – within their own digital platforms.
Osunkeye said companies operating in sectors such as logistics, remittances, retail distribution and energy are increasingly seeking integrated financial services rather than directing customers to separate banking applications. “The future of banking is not necessarily another super app,” he said. “It is banking embedded within the platforms businesses and customers already use every day.”
He cited the example of an oil and gas technology company that has integrated Nombank’s virtual account infrastructure into its operations, enabling fuel stations to process settlements while simultaneously providing transaction visibility that supports working capital lending during periods of constrained liquidity.
As competition intensifies among banks and fintech companies for Nigeria’s SME market, Osunkeye believes institutions will increasingly differentiate themselves through their ability to understand business behaviour rather than relying solely on conventional underwriting models.
“The question has always been how capital reaches the businesses that need it,” he said. “We believe data allows us to answer that question differently.”
BrandiQ Analysis
Data Is Becoming the New Collateral
Nombank’s strategy illustrates a broader transformation taking place across the financial services industry. For decades, access to business credit in Nigeria has largely depended on collateral, audited financial statements and formal documentation—requirements that many micro, small and medium-sized enterprises struggle to meet despite maintaining viable operations.
Digital transaction data is now beginning to challenge that traditional model. By analysing daily payment flows, lenders can gain a more dynamic understanding of business performance, cash flow stability and repayment capacity than static financial statements alone often provide. If adopted responsibly, this approach has the potential to broaden financial inclusion by extending credit to businesses previously considered too risky or too informal for conventional lending.
Competition Is Shifting Beyond Banking Licences
Perhaps the most significant observation from Nombank’s strategy is that competitive advantage in banking is increasingly moving beyond regulatory licences.
Osunkeye’s assertion that “our advantage is data” reflects a wider industry trend. As digital payments become more widespread, the institutions with the richest transaction datasets may gain stronger capabilities in credit assessment, customer personalisation and product development.
This suggests that future competition between banks and fintech firms may be determined less by who holds a banking licence and more by who possesses deeper customer insights.
Embedded Finance Is Reshaping Financial Services
The bank’s focus on embedded finance also highlights an important structural shift. Rather than expecting customers to visit banking platforms, financial services are increasingly being integrated directly into the digital ecosystems where businesses already operate.
For SMEs, this could reduce operational friction by combining payments, collections, savings and credit within a single workflow. For financial institutions, embedded finance creates opportunities to strengthen customer relationships while generating richer behavioural data that can improve lending decisions.
The Bigger Picture
Nigeria’s SME sector remains one of the country’s largest sources of entrepreneurship and employment, yet access to finance continues to constrain business expansion.
Technology-driven credit assessment models such as the one being developed by Nombank suggest that the future of SME banking may depend less on physical collateral and more on digital evidence of commercial activity.
If these models continue to mature while maintaining prudent risk management, they could help narrow one of the country’s most persistent financing gaps and accelerate broader financial inclusion.
Ultimately, Nombank is not simply pursuing a larger share of the SME banking market. It is betting that the future of business lending will be determined not by paperwork, but by data – and that understanding how businesses actually operate will become the defining competitive advantage in the next generation of banking.
