Financial institutions should pay keen attention to the wants of various consumer segments.
The overall demand for financial products slightly decreased by 2 points from mid-2020 to mid-2022. This drop was driven by a 6-point drop in demand for savings accounts products and a 3-point drop in loan and investment products. Interestingly, while most of the financial products were experiencing a decline in demand, mobile money gained momentum as its demand increased by 8 points.
Additionally, consumers are paying key attention when it comes to savings products; averagely the product leads in demand at 0.14 followed by day-to-day banking at 0.125. Against all expectations, insurance products maintained a constant demand of 0.11 across the period.
Consumers appetite for mobile money drives up demand while economic challenges drive demand down for savings
Across segments, all but Baby Boomers drove demand for mobile money products. Millennials are leading in their incremental demand at 10 points followed by Gen Zers at 8 points. Gen Xers follow at 3 points while Baby Boomers are demanding mobile money products less (3-point drop).
On the other hand, Baby Boomers are single-handedly driving demand for savings products. While other age-groups seem to be struggling with building a saving culture, Baby Boomers are saving their finances as they edge closer to retirement.
With the prevailing inflation rate in the country, money personalities of consumers based on their income levels are quite clear. Consumers who earn under 500 USD are demanding more of savings account products at 0.14. Mid-income earners (501 USD – 1800 USD) are driving demand for mobile money products at 0.16. while high income earners (1801 – 4500+ USD) are driving demand for investment products at 0.15.
Mobile money to drive financial inclusion across the youth
With the youth forming about 60% of the Nigerian population, financial institutions should look into incorporating mobile money products. The pandemic brought with it cashless transactions that encouraged convenience as traditional banks tend to have queues that are time consuming for consumers. As such, traditional banking may no longer work efficiently for the youth.
Though mobile money products are not popular in Nigeria, players like Paga Mobile, MTN’s Momo and First Banks’ Firstmonie should target the youth to capture market share from traditional banks in this growing demographic.
Financial institutions should pay keen attention to the wants of various consumer segments. This has an effect of ensuring that they create awareness around relevant products that consumers want. While Baby Boomers want saving account products, millennials want mobile money services. Additionally, income level determines what consumers can purchase.
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