Financial institutions in Nigeria have made considerable investments in the field of Information Technology (IT) in order to improve their security systems and ease customer transactions.
According to a survey carried out by BusinessDay, the banks’ investments in IT increased from ₦28.19 billion recorded in the first quarter of 2023, to ₦73.09 billion in Q1, 2024 indicating an increase of about 159.22%.
The survey further linked the increased IT spending to the banks’ preference for electronic transactions as evident in the profits from electronic mode of payments which grew to ₦237 trillion in Q1, 2024 from ₦126 trillion in Q1, 2023.
A breakdown of the IT spending of the seven Nigerian banks showed that Access Bank made the highest investment in its IT department with ₦22.35 billion. Coming behind was GTBank with ₦14.32 billion spending.
Zenith Bank came next with an investment of ₦13.14 billion. Next was Fidelity Bank Plc with ₦10.22 billion, UBA spent ₦8.57 billion, FCMB spent ₦4.11 billion and Wema Bank spent ₦389.90 million.
The growing investment in the IT sector comes amid the rise in cashless transactions following the Central Bank of Nigeria’s (CBN) naira redesign policy and withdrawal limits introduced in December 2022.
The investments in tech have yielded positive fruits as banks have profited majorly from the transactions with five Tier One banks recording an income of ₦392 billion from electronic business in 2023.
Apart from e-transactions, banks are also investing heavily in fraud prevention due to a reported rise in fraudulent activities (₦59 billion loss since 2019) following the rise in electronic modes of payments.
A report by Gartner, Inc. showed that in 2023, IT spending in the global banking and investment services sector was about $652.1 billion.
This has been projected to rise in 2024 as a report by Acuity Knowledge Partners has projected that global investment banks and advisory firms will increase their firms’ tech spending in 2024.