The top Nigerian banks, which include FUGAZ (FBN Holding, UBA, GTCO, Access Bank, and Zenith Bank), incurred N42.4 billion in IT expenses for software acquisition in 2022. This represents a slight drop from N43.9 billion spent in 2021. Access Bank reportedly spent N44.6 billion, representing a 73% increase from N25.8 billion spent in 2021.
Ramp-up in Software Cost
Nigerian banks are investing heavily in software solutions to improve their operations, enhance customer experience, and bolster security measures. As new innovations in technology, such as artificial intelligence, Web 3, IoT, blockchain, digital identity, and cloud computing, are instigating the need to increase IT spending, the banks have spent more on software acquisition in 2022 compared to the previous four years.
Impact of COVID-19
The COVID-19 pandemic has significantly influenced the spending patterns of banks, prompting a shift in consumer behavior and forcing banks to adapt to the new normal of remote and digital banking. Banks are allocating more resources towards acquiring and enhancing software solutions that support remote operations, ensure seamless digital customer experiences, and enhance cybersecurity measures. They are also investing in data analysis and business intelligence tools to gain insights into changing customer preferences and make informed decisions in an uncertain economic environment.
Cashless Policy and Future Investments
According to Mr. Tolulope Adeyinka, the Fintech Business Development Manager at Mastercard, it is crucial for Nigerian banks to invest in advanced technologies now to improve their capacity ahead of the full implementation of the cashless policy in December 2023. Adeyinka stated that both fintech companies and banks will have made significant investments to address current capacity issues by then. Therefore, there is a need for banks to prioritize investments in superior technology and increase their capacity.