Last Updated on 23 July 2024 by Naijadazz
Three major Nigerian banks—GTCO, Access Holdings, and Fidelity Bank—are poised to invest a combined total of N186 billion ($244 million) from their recent public offerings to enhance their IT infrastructure. This initiative is part of their efforts to meet the Central Bank of Nigeria’s (CBN) new recapitalization requirements.
GTCO Plc plans to allocate 26.6% of its anticipated N400.5 billion ($526 million) in public offer proceeds, amounting to N98.5 billion ($129 million), for technology upgrades. This includes N70 billion ($92 million) for its core banking application, N15 billion ($20 million) for information security and fraud prevention software, N6 billion ($8 million) for upgrading digital channels like mobile and internet banking, and N7.5 billion ($10 million) for enterprise management solutions, all slated for completion within 12 to 24 months.
Access Holdings will invest N68.6 billion ($90 million) or 20% of its N343 billion ($451 million) proceeds in IT infrastructure. This includes N41.1 billion ($54 million) for network infrastructure and N27.4 billion ($36 million) for cybersecurity over the next 36 months.
Fidelity Bank is dedicating 20% of its N95 billion ($125 million) in proceeds, approximately N19 billion ($25 million), to IT upgrades. This includes N9 billion ($12 million) for cybersecurity, N7.6 billion ($10 million) for software licenses and hardware, and N2.3 billion ($3 million) for network infrastructure, with a projected completion timeline of 48 months.
The surge in electronic transactions and rising online fraud incidents in Nigeria have highlighted the need for these banks to bolster their cybersecurity frameworks and acquire new software licenses. Analysts emphasize the importance of these investments, noting the severe impact a single security breach can have on the financial system. The shift towards electronic banking, particularly during periods of cash scarcity, has exposed the inadequacies in current IT systems.
“There is a clear need for an overhaul of IT infrastructure in many banks, driven by customer experiences and the increasing reliance on digital banking,” said Mr. Bello Muritala, founder of SalesUltimo, a SaaS technology company. He noted that investing a significant portion of recapitalization funds in technology is a positive step, enhancing the digital banking experience for Nigerians. Robust cybersecurity measures would help mitigate fraud risks, boosting customer trust and investor confidence.
Mr. Dipo Alabede, CEO of Clane, a mobile payment company, stressed that investing in technology and cybersecurity infrastructure is crucial for automating and streamlining processes, reducing manual errors, and improving service delivery. He added that robust IT infrastructure supports advanced digital banking services, essential for retaining and attracting customers. With the rise of digital platforms comes an increase in cyber threats, making investments in cybersecurity imperative for protecting sensitive customer data, maintaining trust, and complying with regulatory requirements.
The competition from fintech companies like Opay, Palmpay, and Moniepoint, which have agile and scalable infrastructure, has pressured traditional banks to invest more in technology. However, some industry analysts argue that the 20% investment by Access Holdings and Fidelity Bank may not be sufficient for the necessary IT infrastructure overhaul, especially given the increasing deployment of Artificial Intelligence (AI) across sectors.
The ongoing recapitalization exercise is projected to raise an estimated N4.2 trillion, with about N840 billion potentially directed towards IT infrastructure, benefiting tech giants like Amazon Web Services (AWS) and Microsoft Azure, as well as local IT firms providing services to the banks. This significant investment in technology is expected to enhance the banks’ digital capabilities and strengthen their competitive position in the evolving financial landscape.
Related posts:
CBN Resumes Forex Sales to BDCs at N1,021/$1, Caps Resale Margins 
0.5% Cyber Levy Puts CBN on Path to Secure, Inclusive Digital Banking How CBN Aims to Resurrect Billions in Forgotten Assets 
Nigerian Banks Record Combined Post-Tax Profit of N3.156 Trillion in 2023 
Nigeria’s Advertising Industry, Valued at N500 Billion, to Reach N893 Billion by 2028
