Rising inflation and shrinking consumer spending are taking a heavy toll on Nigeria’s banking sector, forcing financial institutions to re-evaluate the sustainability of maintaining a large base of small depositors.
With management costs rising, analysts say it is increasingly inefficient for banks to service low-value accounts, especially in an economy where operating expenses continue to rise.
A senior banking executive who spoke to Nigerian Tribune described the situation as “a nightmare for many banks.”
According to him, “a small depositor is usually willing to visit the bank several times a week and spend hours engaging the bank’s staff and systems to resolve the smallest problems, ignoring all the costs associated with such interactions. In many cases, the small customer spends more on transportation and communications than the money he is trying to recover from the bank.”
The executive added that managing a huge population of small depositors requires an unusual level of ingenuity and cost-saving strategies, since these clients tend to consume a disproportionate share of banks’ time and resources.
“The largest number of customers who visit banks’ customer service counters are those who deposit the least, and their transactions consume the most time and energy,” he said.
Reflecting this challenge, Standard Chartered Bank Nigeria Limited has announced plans to close all customer accounts with balances below ₦7.5 million by February 28, 2026, as part of a major restructuring of its retail operations.
In a statement, the bank explained that the decision is part of its strategy to “optimize services and improve customer value propositions” in its newly introduced Emerging Affluent Segment.
The new policy applies to clients who do not meet the minimum assets under management (AUM) threshold of ₦7.5 million.
“This decision aligns with our ongoing review of business operations to ensure we provide premium services to our customers while maintaining efficiency across our portfolio,” the bank said, adding that all affected customers have been duly notified and advised on next steps.
Standard Chartered also clarified that the adjustment will not affect access to its digital channels.
Online and mobile banking platforms will remain operational, allowing customers to manage their accounts, make transactions and access services remotely.
Industry analysts say the move reflects a broader trend among international banks operating in Nigeria, many of which are refocusing on high-net-worth individual and corporate clients in response to rising costs, exchange rate volatility and stricter regulatory compliance requirements.
They point out that in the current economic climate, it is unprofitable and risky for banks to lend to micro and small businesses, which often struggle to survive under the weight of high borrowing costs (currently averaging between 30 and 35 percent) and are more likely to default.
Furthermore, as inflation erodes disposable income and consumer spending, maintaining low account balances offers little incentive for banks already facing high operating expenses.
While Standard Chartered’s move has sparked debate among customers and financial commentators, experts say it underlines the growing tension between financial inclusion and profitability in Nigeria’s banking system.
“The reality is that banks are private companies, not social institutions,” explained another analyst.
“When the cost of serving small depositors exceeds the value they bring, the business case becomes unsustainable, especially in an environment of double-digit inflation, unstable exchange rates and rising operating costs.”
However, Standard Chartered has assured affected clients of continued support during the transition, emphasizing its commitment to the Nigerian market through digital innovation and sustainable financial solutions.
As inflation continues to erode value and consumers struggle to hold on to savings, analysts warn that other banks could follow suit, potentially reshaping Nigeria’s retail banking landscape in the coming years.