Nigerian banks are facing growing financial pressures as they overhaul their core banking software, with estimates suggesting that five of the country’s largest lenders—First Bank, UBA, GTBank, Access Bank, and Zenith Bank—will collectively spend at least ₦82 billion annually on these technology upgrades. This comes as banks increasingly invest in digital infrastructure to keep up with the evolving financial landscape.
The push for modernization, however, has not been without hiccups. Since September 2024, at least four major Nigerian banks have transitioned to new core banking platforms, a move that has left millions of customers temporarily unable to access their accounts, sparking widespread frustration. While the operational disruptions have been well-documented, the financial costs of these upgrades have received less attention.
In mid-October, Guaranty Trust Bank (GTBank) informed customers that it had completed its switch to the Finacle banking platform—a move that could reportedly cost the bank up to ₦25 billion annually in licensing fees, according to an insider. The switch was first reported in September, underscoring the significant investments required to sustain and improve banking services in Nigeria’s fast-growing financial sector.
According to industry insiders, Nigerian banks typically spend around $10 million per year on their core banking software, bringing the combined total for the largest players in the sector to $50 million, or approximately ₦82 billion, each year. This figure accounts for roughly 1% of the combined half-year revenues of the five leading banks, which reported gross earnings of ₦8.52 trillion in 2024.
The necessity of these upgrades is clear. With millions of customers relying on digital banking channels, ATMs, and online services, Nigerian banks must continually invest in technology to meet customer expectations and maintain competitiveness. As part of broader technology strategies, three of Nigeria’s largest banks have allocated a combined ₦224.22 billion ($136 million) for technology infrastructure improvements.
Guaranty Trust Holding Company (GTCO), known for its operational efficiency, leads the pack with ₦98.5 billion earmarked for technology upgrades. Access Holdings, the parent company of Nigeria’s largest bank by assets, plans to spend ₦68.62 billion, while Zenith Bank Plc, Nigeria’s largest lender by market capitalization, has set aside ₦57 billion for its own technological advancements.
These investments cover a wide range of systems beyond core banking platforms. Banks are also upgrading customer relationship management (CRM) software, digital banking channels, cloud storage, risk management systems, and fraud detection frameworks. As the financial services industry becomes more data-driven, managing complex datasets and securing customer information are also priorities.
While the tier-1 banks are better positioned to absorb these costs, tier-2 banks are taking a more strategic approach to manage expenses. Sterling Bank, for example, recently switched to SEABaaS, a custom-built core banking system, after using T24, developed by Switzerland-based Temenos AG. Cost efficiency was the primary motivation for the switch, with the bank planning to eventually sell SEABaaS to other financial institutions as a way to recoup its investment.
The transition to a new core banking system is not a simple process, often requiring months of planning, extensive testing, and approvals from top management. For Sterling Bank, discussions around the change began as early as 2022, with the development of the new system taking at least seven months. Similarly, GTBank’s switch to Finacle started in late 2023.
A key challenge during these transitions is data migration, where vast amounts of customer and transaction data need to be transferred to the new platform without errors. One banking engineer described the process as critical, explaining that mishandling the migration could result in prolonged downtime and significant customer dissatisfaction.
As millions of customers have experienced service disruptions during these upgrades, Nigerian banks have faced increasing scrutiny. Many have issued statements to reassure customers, but with limited transparency about the details of the changes, banks risk losing the trust of their clientele. Moving forward, banks may need to do more to address customer concerns and minimize the impact of these technological shifts.
