Six major Nigerian banks spent a staggering ₦268.7 billion ($171.5 million) on IT infrastructure and tech-related services in 2024, marking a significant 74.5% increase from the previous year. This surge in investment is largely attributed to the growing competition from fintech companies, which have become increasingly popular among Nigerians, especially after the botched currency redesign in early 2023 led to widespread cash shortages and exposed the limitations of traditional banking infrastructure.

The banks, including 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, saw their combined IT spend jump from ₦153.8 billion ($98.2 million) in 2023. GTCO reported the highest IT spend with ₦88 billion ($56.8 million), followed by Zenith with ₦67.3 billion ($43 million).

The increased technology spending comes as traditional banks face growing competition from fintech companies like Opay, PalmPay, and Moniepoint, which have become go-to platforms for many Nigerians. In response, major banks, including GTBank, Zenith, First Bank, Sterling Bank, and Access Bank, overhauled their core banking systems in 2024. For instance, GTBank switched its core banking software from Basis to Finacle, a product of Infosys, while Zenith Bank migrated to Flexcube, developed by Finastra, replacing its legacy Phoenix system.

While the upgrades were not without hiccups, leading to prolonged service disruptions that impacted millions of customers, industry experts believe that the increased IT expenditure has mitigated the failure rate and downtime during financial transactions. According to Ayodeji Ebo, managing director of Optimus by Afrinvest, "The enhancement of core banking applications has stabilized the services of some banks."

The cost of the banking software, priced in dollars, nearly doubled due to the naira devaluation. A core banking software expert revealed that tier-1 banks spend at least $10 million annually on core banking software licenses and support. Despite the significant investment, banks see long-term benefits in expanding retail customer acquisition and financial inclusion. Gbolahan Ologunro, portfolio manager at FBNQuest Asset Management, noted that "Improving customer experience through digital platforms would increase the appetite of those who are yet to be banked and get themselves finally included in the financial net."

Nigeria's financial inclusion rate rose to 64% in 2023, up from 56% in 2020, according to data from EFInA. The Central Bank of Nigeria expects that figure to hit 80% by 2026. The surge in IT spending is also fueling growth for IT vendors, such as Computer Warehouse Group (CWG) Plc, which provides managed services, IT infrastructure support, and integration to telcos and banks. CWG saw profits soar by 428.4% to ₦3.04 billion in 2024, hitting the billion-naira mark for the first time.

As banks continue to ramp up tech spending to stay competitive, the challenge is no longer just about upgrading legacy systems: it's about staying relevant in a market where speed, convenience, and customer experience determine the winners. The Nigerian banking sector's digital transformation is expected to continue, driven by the need to adapt to changing customer behavior and the increasing threat of fintech disruption.