Technological advancements have revolutionized the banking sector, prompting Nigerian banks to invest heavily in information technology to meet the growing demand for electronic banking services. A recent survey conducted by Fatshimetrie revealed a significant increase in IT investments by banks in the first quarter of 2024, from ₦28.19 billion to ₦73.09 billion, an impressive growth of 159.22%.
This upward trend in IT spending is closely linked to banks’ growing preference for electronic transactions, as evidenced by profits from electronic payments reaching ₦237 trillion in Q1 2024, up from ₦126 trillion in Q1 2023.
A detailed look at the IT investments of Nigeria’s top seven banks reveals that Access Bank made the largest investment, spending ₦22.35 billion on its IT department. GTBank comes in close behind with spending of ₦14.32 billion, followed by Zenith Bank with ₦13.14 billion.
The increase in IT spending is also driven by the rise in cashless transactions, driven by the naira redesign policy and withdrawal limits introduced by the Central Bank of Nigeria in December 2022.
These investments in technology have paid off, with banks recording significant revenues from electronic transactions, with five major banking institutions recording ₦392 trillion in revenue from e-business in 2023.
In addition to electronic transactions, banks are investing heavily in fraud prevention in response to an increase in fraudulent activities (₦59 billion in losses since 2019) linked to the rise of electronic payment methods.
A report by Gartner, Inc. indicates that information technology spending in the global banking and investment services industry reached approximately $652.1 billion in 2023.
These massive IT investments demonstrate the commitment of Nigerian banks to remain at the forefront of technological innovation to meet the changing needs of customers and ensure the security of electronic transactions in an ever-changing environment.