Speed is a competitive advantage in Nigeria’s $2.1 billion digital lending market. Fintech lenders promise approvals in minutes, using automation to move borrowers from application to disbursement with as little friction as possible.
However, Nombank, the microfinance banking subsidiary of Nigerian fintech Nomba, has taken a different approach after securing its licence in December 2024.
Rather than approving loans within minutes, the lender said it deliberately takes between 24 and 48 hours to make a credit decision.
Payment data powers much of its underwriting, but account officers still verify merchants before any loans are approved, sometimes through physical visits. That slower process, the bank says, has helped it keep its non-performing loan ratio below 1%, well below the banking industry’s average of 8%.
“We want to give loans that will truly come back,” Seun Osunkeye, Nombank’s managing director, told TechCabal in an interview. “Most importantly, we are interested in businesses growing, merchants growing, and everyone being happy.”
In April, Nomba and Globus Bank announced that their 18-month lending partnership had disbursed ₦21.3 billion ($15.45 million) to Nigerian businesses while keeping non-performing loans below 1%.
Non-performing loans are loans that borrowers have stopped repaying, making them a key measure of a lender’s credit quality. A ratio below 1% means fewer than one in every 100 loans on Nomba’s books has fallen into default, suggesting the bank has kept bad debts unusually low even as it expanded lending.
This is well below industry standards, where eight in every 100 loans fall into default. In its January economic report, the Central Bank of Nigeria noted that the industry’s non-performing loan ratio rose to 8.03% in January 2026, above the prudential threshold of 5%.
Lending against cash flow
Nombank’s lending model begins long before a customer applies for credit. Because it lends exclusively to merchants already using Nomba’s payment infrastructure, the bank has months of transaction data before it makes a lending decision.
Osunkeye said merchants are typically expected to have processed payments on the platform for at least three months, allowing Nombank to observe how money flows through the business before extending credit.
The bank notes that it analyses daily, weekly, and monthly transaction patterns flowing through merchants’ accounts, studying how consistently businesses generate revenue, whether sales fluctuate seasonally, and how stable their cash flow has been over time.
Those patterns determine not only whether a merchant qualifies for credit but also how much the bank will be willing to lend. Osunkeye explained that the facilities are generally capped at about 20% of a merchant’s monthly inflows, and most are structured as seven-day, two-week, or one-month working capital loans designed to help businesses replenish inventory or meet short-term operating needs.
Most of the loans disbursed go to retailers.
“It is mostly in the retail segments. That is where we see this kind of need. If you are looking at the big guys, like big sectors, those are probably looking for expansion, but these other people, they just need to get one or two things quickly,” Osunkeye said.
The bank currently lends between ₦50,000 ($36.26) and ₦1.5 million ($1,087.69) per customer, with an upper lending limit of ₦2 million ($1,450.25).
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Nombank’s strategy relies heavily on Nomba’s broader business model. As more merchants process payments through its terminals, the company gathers richer transaction histories, making it easier to assess risk and extend credit.
Daily payment volume across Nomba’s platform has grown from about ₦7 billion ($5.08 million) in May 2025 to roughly ₦250 billion ($181.28 million) by May 2026, according to company figures shared with TechCabal.
Why Nombank still knocks on doors
Despite relying heavily on payment data, Nombank has taken a hybrid approach to its lending process, combining automation with human assessment.
Before many loans are approved, account officers confirm that merchants are still operating, maintain regular contact with customers, and, where necessary, visit businesses physically before disbursement, according to Osunkeye.
The MFB previously experimented with near-instant lending but concluded that transaction data alone was insufficient to assess repayment risk.
“We tried ensuring customers could get loans in minutes,” Osunkeye said. “But you might assume you still have a relationship with a merchant even though the account officer hasn’t visited that business for a long time.”
For Nombank, payment data identifies potential borrowers. Character profiling helps with the final lending decision.
“So, for us, we prioritise 24 to 48 hours,” he said. “The account officer checks the merchant before we disburse the loan. Everyone is selling automated, quick loans, but that relationship is very important. Character is very important.”
The process is slower than that of many fintech lenders, but Nombank believes the additional checks improve repayment rates and reduce credit losses.
According to Gbemi Adelekan, president of the Money Lenders Association, digital lenders face severe structural and operational risks.
“Such risk, including the exceptionally high non-performing loans, coupled with the high cost of technology in providing loans in minutes, allows money lenders to charge a little premium on their interest rates,” he told TechCabal.
Scaling without losing discipline
Nombank currently operates under a tier-1 microfinance banking licence, according to Osunkeye, limiting its operations largely to urban markets, and it must have a minimum capital requirement of ₦200 million ($145,025). The MFB is currently operating within the Ifo local government of Ogun State, a state that borders Lagos in southwestern Nigeria.
The bank says it has disbursed about ₦500 million ($362,563) in loans so far this year after lending roughly ₦100 million ($72,512) throughout last year. It expects to reach at least ₦1 billion ($725,126) in loan disbursements before year-end.
Nombank’s loan books pale in comparison to other fintech operators like FairMoney MFB, which said it disbursed more than ₦150 billion ($109.22 million) in loans in 2025. Moniepoint said it disbursed over ₦1 trillion ($728.15 million) in loans to small businesses during the same period. In 2025, Sycamore said it disbursed close to ₦20 billion ($14.56 million) in loans.
Nombank says it is working toward obtaining a national microfinance banking licence, a move that would significantly expand the number of merchants it can serve. But scaling nationally also challenges the very lending model that has kept defaults low.
Instead of simply hiring thousands of additional relationship managers, Osunkeye said the bank would explore ways technology can replicate some of the trust and verification that physical visits currently provide.
“It is either you increase the number of people you hire, or you use technology to improve the process,” he said. “There is face verification. There are location technologies. There are many things technology can do to ensure we continue giving loans that will truly come back.”
Nombank currently funds its lending activities from customer deposits, but a national licence would require a larger capital base as lending volumes increase. The Central Bank of Nigeria expects national MFBs to have a minimum capital requirement of ₦5 billion ($3.63 million), a 2,400% increase from Nombank’s current capital requirement.
“When we are a national MFB, we will need to increase our capital base to be able to ensure that we can serve more people, give out more loans,” Osunkeye said.
As Nombank scales, its lending model will face its biggest test: whether the underwriting discipline that works today can survive national expansion, when merchants are more numerous, distances are greater, and account officers can no longer knock on every borrower’s door.
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