The Critical Role of Trust in Financial Inclusion

Sustainable and Inclusive DFS
5 min readJul 3, 2018

Nigeria’s financial inclusion aspiration of 80 percent by the year 2020 is failing.

This assertion is based on the latest findings by the World Bank Global Findex and Intermedia. Measurement indicators published by both institutions agree that financial inclusion is on the decline — between 2014 and 2017, more people abandoned their bank accounts.

While the reasons for this exodus and decline in inclusion are debatable, there are several reasonable causes and trust is definitely one of them.

In this article, we explore the role trust plays in adoption and use of formal financial services and recommend necessary interventions.

The role of trust

Trust is a powerful driver of human behavior and a foundation of relationships — be it human-to-human, or between humans and institutions. We trust our employer to pay us at the end of the month, so we go about our work as normal. We trust our friends to support us in the midst of challenges and struggles, so we confide in them.

When it comes to money, the role of trust is even more pronounced. Trust in finance is like trains on a track. To onboard or attract new customers to the formal sector, financial service providers (FSPs) must first earn consumer’s trust. Regulatory authorities also have a role to play in this by developing frameworks which protect consumers while enforcing compliance by financial institutions. But, it does not stop there.

An emerging body of work is highlighting the fact that it is the frequent usage of financial services, not merely opening up accounts, that will enable us see the true benefits of financial inclusion. But active or frequent usage will remain elusive and the formal sector will continue to experience this churn of customers if trust is not established.

Building trust

The first and most important element of trust building is what is called “fulfilling your promises”. In all relationships, trust is developed when parties can be counted on to deliver on what they have promised. The same applies to banks.

The expectation placed on formal financial service providers is that they are a more secure means of keeping money, the customer’s savings will accrue interest and customers can later avail themselves of loans and short term credit facilities. That’s the sell.

However, does the theory match the experience? The dissonance between what customers are promised and what they usually experience is responsible for the lack of trust, and often leads to the churn in bank customers. Trust is built on experience. It doesn’t matter how good the marketing is, if consumers are having first hand experiences with less than adequate and unsatisfactory services from financial service providers, financial inclusion will suffer.

If providers will successfully onboard customers, they need to work on delivering the services they promised at the right time and quality.

Past experience is one of the most important considerations when it comes to trust. A bad experience at a bank will impact a consumer’s willingness to engage with this institution and use its products and services in the future.

Why is this important?

Nigeria is at a critical junction in her financial inclusion journey. We’re less than two years away from the 2020 deadline and financial inclusion has declined. Stakeholders in the industry are considering ways to tackle this problem. Of particular interest is the SANEF project, a shared agent network of 500,000 agents, aimed at delivering financial services to Nigeria’s more than 50 million adults who are unbanked or underserved.

The project is reportedly underway and while it is quite ambitious and laudable, the benefits could be minimal if the fundamental problems within the banking sector prevails, one of which is trust.

People just don’t trust banks.

In fact, even banked individuals regularly express displeasure with their financial service providers. How does an ecosystem begin to win back the trust of the unbanked populace when banks are seen as unfair players, with hidden fees, high prices and unfulfilled promises?

Trust is also eroded through word of mouth. When other consumers of financial products are let down by their financial institutions, they spread the word (negative word of mouth). The reputation of the country’s financial services ecosystem still suffers in many regions today based on stories and experiences of bank customers.

In spite of these, building trust is not a mystery, some tactics are described in the following section.

Trust building for financial inclusion

Improve customer service.

Customer service is the backbone of trust building. Sam Walton, the Walmart founder, once shared a critical pillar in building trust with customers, “The goal as a company is to have customer service that is not just the best but legendary.”

Even after onboarding new customers, providers have to work at building the relationship by investing in efficient customer service systems, taking into consideration the diverse literacy levels and cultural peculiarities of their customers.

Educate consumers.

As kids, we were taught to look right, left and right again before crossing the road. That’s because crossing the road is risky and life threatening. Yet, we want people to engage financial services without adequate enlightenment. The results could be disastrous.

The ecosystem has a responsibility to educate people (especially the unbanked) on how financial services work, making it clear to them the requirements, hidden charges etc.

Complaints resolution.

When a transaction goes wrong, customers need a viable course of redress. This involves knowledge of all available channels of lodging complaints and seeking resolutions of problems in a timely fashion. Customers also need to be empowered to know what to do when their providers are not fulfilling their promises. These mechanisms helps build consumers’ confidence in the system and reassures them that their money is secure.


Trust, and the lack thereof, is one of the reasons why our financial inclusion efforts are not yielding the desired fruit. If the financial services sector is going to see success in penetration of their products and services, we need to figure out ways to cross the chasms of distrust in the consumers’ mind.

In what other ways can this be achieved?



Sustainable and Inclusive DFS

We work with government, financial services regulators, donors and the private sector to drive financial inclusion in Nigeria through #research #advocacy