Six major Nigerian banks made headlines in 2024 when they collectively poured a staggering ₦268.7 billion (equivalent to $171.5 million) into IT infrastructure and tech-related services, marking a substantial leap from their previous year’s spending. This significant investment primarily focused on upgrading core banking systems as traditional financial institutions faced mounting pressure to bolster their technological capabilities in response to the rapid rise of fintech disruptors.
Banking on Technology: The Big Players
The six prominent banks at the forefront of this tech surge were Guaranty Trust Holding Company (GTCO) Plc, United Bank for Africa (UBA) Plc, Zenith Bank Plc, Wema Bank Plc, Stanbic IBTC Holdings, and FCMB Group Plc. Each institution witnessed a remarkable uptick in their IT expenditure compared to the prior year, with GTCO leading the pack by investing ₦88 billion ($56.8 million), closely followed by Zenith with ₦67.3 billion ($43 million). UBA, Stanbic, FCMB, and Wema also made substantial contributions toward enhancing their technological infrastructure.
As competition intensified from innovative fintech players such as Opay, PalmPay, and Moniepoint—popular alternatives that gained traction following cash shortages triggered by a currency redesign misstep in early 2023—the conventional banking sector faced an urgent need to modernize its systems for improved efficiency and customer satisfaction.
The Evolution of Banking Technology
In October 2024 alone, GTBank underwent a pivotal transition by migrating its core banking software from Basis to Finacle—a cutting-edge product developed by Infosys. Similarly, Zenith Bank embraced change by shifting to Flexcube provided by Finastra as it bid farewell to its outdated Phoenix system. Despite these bold moves towards digital transformation, glitches during system upgrades led to prolonged service disruptions affecting millions of customers.
“The enhancement of core banking applications has stabilized the services of some banks,” quoted Ayodeji Ebo, Managing Director of Optimus at Afrinvest. He emphasized how increased IT spending helped mitigate transaction failures and downtime issues but noted that software costs surged due to currency devaluation—a challenge many banks had to navigate amid technological advancements.
Expert Insights: Navigating Tech Investments
According to an anonymous core banking software specialist cited by TechCabal, tier-1 banks typically allocate upwards of $10 million annually towards licensing and supporting essential banking software—a necessary investment for long-term operational efficiency despite short-term disruptions during implementation phases.
Gbolahan Ologunro from FBNQuest Asset Management highlighted how prioritizing digital initiatives was crucial for expanding customer reach and fostering financial inclusion among unbanked populations. With Nigeria’s financial inclusion rate climbing steadily in recent years—from 56% in 2020 to 64% in 2023—the Central Bank anticipates reaching an ambitious target of 80% inclusion by 2026 through sustained industry innovation and robust technology adoption.
Impacts Beyond Banking Institutions
As major lenders ramp up their tech budgets in pursuit of competitive edge retention amidst evolving market dynamics defined by speed and convenience expectations amongst consumers—an ecosystem where superior user experience dictates success—IT vendors like Computer Warehouse Group (CWG) Plc are witnessing unprecedented growth opportunities driven by soaring demand for managed services tailored specifically for telcos & financial entities like banks.
CWG’s stellar performance reflected this trend with profits skyrocketing by an impressive 428.4% in 2024—an achievement that marked the company’s ascension into the exclusive billion-naira profit club for the first time ever. The surge in IT spending not only benefits domestic vendors but also underlines a broader shift within Nigeria’s economic landscape towards embracing digital solutions as catalysts for sustainable growth across various sectors beyond traditional finance realms.
In conclusion,
the future trajectory
of Nigeria’s
banking landscape will be intricately intertwined with ongoing technological advancements—that much is certain.
By continuously adapting
and innovating,
financial institutions
are gearing up
for a dynamic era
where seamless digital experiences
will reign supreme
as they strive
to meet evolving customer expectations
and drive inclusive economic progress.
This transformative journey underscores
the pivotal role technology plays
in reshaping
not just how we bank,
but how we live,
connect,
and thrive
in an increasingly interconnected world.
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