In the first half of 2024, five major Nigerian banks—Zenith Bank, Access Bank, Guaranty Trust Holding Company (GTCO), Wema Bank, and United Bank for Africa (UBA)—significantly increased their spending on information technology, together amounting to N178.77 billion. This marks a substantial 203 percent increase from N58.8 billion spent during the same period in the previous year, indicating a determined push by these banks to bolster their digital infrastructure in response to growing customer demands and the competitive landscape of the banking industry. These investments reflect a broader trend where financial institutions prioritize technology upgrades to enhance service delivery, secure their operations, and mitigate customer dissatisfaction.
Specifically, Zenith Bank alone allocated N23.10 billion to its technology infrastructure in the first half of 2024, up 166.54 percent from N8.67 billion during the corresponding period in 2023. However, despite this substantial investment, customers expressed frustration over ongoing issues with online banking transactions following a planned maintenance period from September 29 to October 1. Users took to social media platforms, particularly X (formerly Twitter), to report difficulties accessing services and completing transactions even after the maintenance window elapsed. This instance underscores the challenges banks face in balancing technological advancements with operational reliability and customer satisfaction.
The reports of customer dissatisfaction coincide with a worrying trend; Bank customer complaints soared by 63.54 percent in 2023, totaling over 10 million, compared to 6.12 million in the preceding year. A significant portion of these grievances came from major banks, including Zenith Bank, Access Bank, GTCO, Wema Bank, and UBA. This spike in complaints highlights a disconnect between increased investments in technology and the effectiveness in delivering seamless services to customers, revealing potential shortcomings in the implementation of such technological advancements.
In contrast to Zenith Bank, Wema Bank recorded a 59.03 percent increase in technology spending, reaching N1.13 billion compared to N708 million in the previous year. UBA demonstrated a dramatic rise of 248.20 percent in IT-related expenses, spending N6.70 billion in the first half of 2024, suggesting it is also striving to enhance its digital capabilities. Access Bank led its peers with the highest expenditure on IT, spending N111.24 billion, a staggering 264.55 percent increase year-on-year while GTCO’s IT expenses rose by 115.12 percent, reaching N36.60 billion. These figures reflect the high stakes involved as banks seek to future-proof their operations in an increasingly digital environment.
As financial institutions navigate the operational challenges, many plan to allocate substantial capital raised through various financial channels to strengthen their technology and cybersecurity infrastructure. Reports indicate that banks are earmarking $1.20 billion to invest in advanced technologies, highlighting the increasing prioritization of cybersecurity amid rising cyber threats. Concurrently, the Central Bank of Nigeria has mandated commercial banks to bolster their capital bases, indicating a wider regulatory push to ensure that these institutions maintain sufficient financial stability to fund their technological investments.
Amid these developments, the operational costs for Nigerian banks have skyrocketed, with combined operating expenses surging by 42.51 percent to N3.23 trillion in 2023 up from N2.26 trillion the previous year. This increase underscores the financial pressures these banks face as they strive to meet customer expectations against a backdrop of rising costs. The collective expenditure of N81.92 billion on communications and IT services by 10 commercial banks in the first half of 2022 highlights how integral technology has become to their operations. Sufficient investment in technology will be critical for these banks to adapt and thrive in an evolving marketplace while ensuring they also address customer concerns relating to service delivery.
