Market News

BY Hope Moses-Ashike 

Naira-denominated mutual funds surged by about 140 percent in one year as investor appetite shifted away from dollar assets, signalling renewed confidence in local currency investments.

Dollar-denominated mutual funds recorded slower growth, rising by 12 percent from N1,708 billion in 2024 to N1,920 billion by November 2025. In contrast, naira-denominated mutual funds expanded sharply, growing by about 140 percent from N2,289 billion to N5,480 billion over the same period.

The trend was highlighted in the 2025 Banking Industry Customer Experience Survey Report by KPMG, titled “Competing for the Customer – Beyond the Basics in an AI-Shaped Financial Landscape.”

The reallocation reflects renewed confidence in naira assets and a cautious recalibration of risk by investors amid improving macroeconomic conditions.

“Improved confidence in the naira, underpinned by relative currency stability and steady economic growth of 3.13 percent in the first quarter and 4.23 percent in the second quarter, has begun to influence household financial behaviour,” the report noted. This shift is evident in both savings and investment patterns across income groups.

Household savings behaviour also improved significantly. Only 8 percent of respondents said they do not save from their income, compared with 18 percent in the previous year. Half of respondents now save between 5 percent and 20 percent of their monthly income, indicating a gradual return to financial discipline despite persistent cost pressures.

Generational patterns reveal important customer experience opportunities for financial institutions. Gen Z consumers show a growing commitment to saving, with 68 percent saving at least 5 percent of their income, reflecting rising financial awareness and a preference for digital and intuitive savings tools. Millennials demonstrate consistency, with 25 percent saving between 11 percent and 20 percent of income and 19 percent saving between 21 percent and 40 percent. Generation X continues to prioritise long-term financial security, with 21 percent saving between 21 percent and 40 percent of income.

These trends point to a strengthening culture of financial planning and clear expectations that financial institutions will deliver savings and investment solutions aligned with life stage, income volatility and digital preferences.

While confidence has improved, investment behaviour remains measured. The investment landscape continues to benefit from cautious optimism driven by fiscal and economic reforms, but consumers remain selective in capital allocation. Many favour low-capital assets that offer perceived stability and serve as hedges against uncertainty.

Commodities such as gold are the preferred investment vehicle for 18 percent of respondents, while fixed deposits, mutual funds and equities continue to form the backbone of most investment portfolios. According to the report, 22 percent of respondents invest between 5 percent and 10 percent of their income, while 17 percent invest between 11 percent and 20 percent.

This behaviour according to the report, underscores the growing importance of trust, financial education and advisory services. Consumers are willing to invest, but only where they feel informed and confident in the institutions guiding them.

Nigeria, the report noted, is steadily transitioning from resilience to reform-driven stability, with its financial ecosystem evolving rapidly. The ongoing banking sector recapitalisation drive is gaining traction as institutions close capital gaps and strengthen trust through improved governance and transparency. At the same time, regulatory reforms ranging from foreign exchange liberalisation to digital finance frameworks and stricter corporate governance enforcement are laying the foundation for long-term economic growth.

This progress is reflected in rising customer confidence, with eight in 10 respondents now saving through formal banking channels. This highlights the central role banks play in shaping household financial behaviour and reinforces the positive impact of ongoing reforms on the broader economy.

In this environment, the report stated that customer experience leadership will be defined not by premium offerings alone, but by relevance, empathy and affordability at scale. Financial institutions that succeed will be those that align product design with real household pressures, simplify access, leverage technology thoughtfully and respond quickly to changing consumer needs. The ability to translate macroeconomic reforms into everyday customer value will ultimately determine which institutions build enduring trust and contribute meaningfully to Nigeria’s economic stability.