Loss of Trust: How Hidden Fees and Downtime Are Destroying Confidence in Nigerian Banks

By Blaise Udunze

In a society where trust is the lifeblood of finance, Nigeria’s banking sector appears to be losing credibility at an alarming rate. The relationship between banks and customers, once characterized by trust and reliability, has devolved into one rife with distrust, frustration, and resentment.

Across the country, Nigerians now speak of their banks not with loyalty but with a weary sense of inevitability, like tenants trapped in a bad lease. This is no longer simply a matter of economic hardship; it’s a growing perception that the very institutions that are supposed to protect people’s money are quietly exploiting them.

Despite repeated sanctions by the Central Bank of Nigeria Central Bank of Nigeria for violating the Guidelines on Fees Charged by Banks and Other Financial Institutions, banks continue to extract billions of naira from customers through transfers, withdrawals, ATM fees, SMS alerts, and account maintenance. With over 312 million active bank accounts across Nigeria, these fees have become a lucrative source of revenue, contributing more to profitability than traditional lending or true financial intermediation. A small sum of 10 naira here, 50 naira there, when extrapolated across 312 million active bank accounts, adds up to billions (multiplied by a 50 naira fee, that’s 15.6 billion naira), quietly draining citizens’ pockets every month.

The banking industry has long tolerated these fees in the name of “service sustainability,” but there are limits to this tolerance. A 10 naira deduction here, a 50 naira deduction there, seemingly insignificant, has become a silent trust tax. For many, these routine, small deductions now mean the difference between making ends meet and going into the red. Despite the central bank’s efforts to regulate bank fees, many institutions continue to test the public’s patience.

A central bank circular (FPR/DIR/GEN/CIR/001/002) issued in February 2025 introduced new ATM withdrawal fees: 100 naira for every 20,000 naira withdrawn at an ATM, with a maximum fee of 600 naira for withdrawals outside of an ATM. Debit card service fees are 50 naira per quarter, credit card issuance fees are 1,000 naira, and online banking security tokens are charged up to 2,500 naira. Add to this a 0.005% cybersecurity levy, remittance fees ranging from 10 to 50 naira, a 7.5% value-added tax on services, a 6.98 naira USSD transaction fee, 6 naira per SMS notification, and a 50 naira stamp duty, and it becomes clear that Nigerians are paying more for their own funds than banks provide equivalent services.

This system makes everyday transactions costly, and in the process, it is eroding public trust at a faster rate than bank deposits. Paul Alage, an economist at SPM Professionals, puts it bluntly: “In Nigeria, there’s no banking. We deal in money storage and deposit fees.” Nigerian banks appear to have mastered the art of holding deposits, profiting not through innovation or lending but through tiered fees. A small business owner transferring 500,000 naira weekly would pay a 25 naira cybersecurity fee, a 50 naira remittance fee, a 3.75 naira value-added tax, and a 6 naira SMS notification fee per transaction, for a total of 84.75 naira. Multiplied by the weekly transaction cycle, these deductions can severely drain working capital.

Worse still, these fees are often opaque. Customers can discover new deductions, such as unexpected taxes. Fee guidelines explicitly call for transparency, but many banks mask their costs with technical jargon and regular, bulk deductions. For the public, this lack of transparency presents not only a financial problem but also a moral one.

Ironically, the very banks that touted their digital transformation are now struggling with reliability. Failed transfers, application outages, and delayed refunds have become as common as direct debit notifications.

In a country increasingly reliant on digital payments, system outages are not merely an inconvenience; they undermine trust. They distort trade, hurt small businesses, and erode confidence in the formal economy. The data speaks for itself: e-commerce revenue at some top banks fell to 209.34 billion naira in the first half of 2025 from 215.01 billion naira the previous year, demonstrating that despite increased customer activity, operational pressures remain significant. Behind the glittering digital marketing lies an inconvenient truth: many banks’ infrastructure is outdated and on the brink of collapse.

As if poor service quality weren’t enough, rumors about liquidity are rampant, threatening what little public confidence remains. In the age of social media, a single trending tweet about “stressed banks” can trigger panic withdrawals before the truth is revealed. Ironically, the data paints a very different picture. In the first half of 2025, bank deposits with the central bank rose to 67.72 trillion naira, a 730% increase over the previous year. System liquidity even reached a high of 5.73 trillion naira. However, during the same period, commercial and merchant banks borrowed 131.42 trillion naira from the Central Bank of Nigeria, a 636% increase.

While these data suggest proactive liquidity management measures by the central bank, rather than a crisis, public perception is based on beliefs, not balance sheets. In banking, perception is reality, and currently, that reality appears shaky.

The core of this crisis is not just monetary, but also moral. The fundamental foundation of banking is trust. Customers deposit money, trusting that the system will protect them, not exploit them. However, in Nigeria, this bond appears fragile. Many banks view transparency as an obligation, not a principle. Every policy adjustment is seen as necessary, but it almost always results in higher demands on customers than they receive in return in terms of service quality.

If banks want to restore their credibility, they must start with empathy. Publish clear fee breakdowns in plain language.Communicate promptly when systems fail. Invest in resilient digital infrastructure, not another rebranding exercise. Recognize that trust isn’t maintained by advertising slogans, but earned through consistency, fairness, and accountability.

The Central Bank of Nigeria must align regulatory rhetoric with enforcement action. Its fee collection guidelines, which stipulate a 2 million naira fine for each violation, are meaningless if they are rarely enforced. A regulator that turns a blind eye to systemic overcharging is complicit in the very erosion of trust it seeks to prevent.

Nigeria’s financial industry cannot be built on mistrust. Every hidden fee, every failed transaction, and every unspoken rumor erodes its moral capital. It’s time for the industry to shift from an obsession with profits to public accountability.

The strength of a banking system is measured not by the size of its headquarters or the number of zeros in its profits, but by the trust of depositors. And regaining that trust, once lost, requires more than just expanding the balance sheet. The Nigerian banking industry must choose between continuing down a path of covert exploitation disguised as financial innovation or returning to its core virtues of integrity, service, and transparency. There is only one way to restore trust.

Blaise, a journalist and public relations expert based in Lagos, can be contacted at: [email protected]