Six main Nigerian banks spent ₦268.7 billion ($171.5 million) on IT infrastructure and tech-related providers in 2024, owing largely to core banking system upgrades, underscoring how rising competitors is forcing conventional lenders to extend tech spending.
The banks—Warranty Belief Holding Firm (GTCO) Plc, United Financial institution for Africa (UBA) Plc, Zenith Financial institution Plc, Wema Financial institution Plc, Stanbic IBTC Holdings, and FCMB Group Plc—noticed their mixed IT spend surge by 74.5% from ₦153.8 billion ($98.2 million) in 2023, in keeping with their newest monetary statements.
GTCO reported the very best IT spend with ₦88 billion ($56.8 million), adopted by Zenith with ₦67.3 billion ($43 million). UBA, Stanbic, FCMB, and Wema recorded ₦48 billion ($30.5 million), ₦33.5 billion ($21.3 million), ₦26.8 billion ($17.3 million), and ₦5.55 billion ($3.6 million), respectively.
Banks’ elevated expertise spending comes amid rising competitors from fintech corporations like Opay, PalmPay, and Moniepoint, which have change into go-to platforms for a lot of Nigerians after a botched foreign money redesign in early 2023 led to widespread money shortages and uncovered the constraints of conventional banking infrastructure.
In 2024, main banks, together with GTBank, Zenith, First Financial institution, Sterling Financial institution, and Entry Financial institution, overhauled their core banking programs.
In October 2024, GTBank switched its core banking software program from Foundation to Finacle, a product of Infosys. Zenith Financial institution additionally migrated to Flexcube, developed by Finastra, changing its legacy Phoenix system. Nonetheless, the upgrades weren’t with out hiccups. These technological modifications led to extended service disruptions that impacted hundreds of thousands of consumers.
“The enhancement of core banking functions has stabilized the providers of some banks,” stated Ayodeji Ebo, managing director of Optimus by Afrinvest. “The elevated IT expenditure has mitigated the failure price and downtime throughout monetary transactions.”
He added that the price of the banking software program—priced in {dollars}—almost doubled because of the naira devaluation. A core banking software program knowledgeable who requested to not be named to talk freely informed TechCabal that tier-1 banks spend no less than $10 million yearly on core banking software program licenses and assist.
Nonetheless, banks see long-term advantages. Gbolahan Ologunro, portfolio supervisor at FBNQuest Asset Administration, stated the digital push is vital to increasing retail buyer acquisition and monetary inclusion.
“Bettering buyer expertise via digital platforms would enhance the urge for food of those that are but to be banked and get themselves lastly included within the monetary web,” he stated.
Nigeria’s monetary inclusion price rose to 64% in 2023, up from 56% in 2020, in keeping with information from EFInA. The Central Financial institution of Nigeria expects that determine to hit 80% by 2026.
The surge in IT spending can be fueling development for IT distributors. Laptop Warehouse Group (CWG) Plc, which offers managed providers, IT infrastructure assist, and integration to telcos and banks, noticed income soar by 428.4% to ₦3.04 billion in 2024, hitting the billion-naira mark for the primary time. CWG provides Finacle, Infosys’ core banking software, to banks.
As banks proceed to ramp up tech spending to remain aggressive, the problem is not nearly upgrading legacy programs: it’s about staying related in a market the place pace, comfort, and buyer expertise decide the winners.