Information technology upgrade by seven top Nigerian banks gulped a total of N460 billion in 2024.
An analysis of the financial statements for the year ended December 31, 2024, showed an aggressive push in their digital infrastructure.
The banks are Access Holdings Plc, Guaranty Trust Holding Company (GTCO) Plc, United Bank for Africa (UBA) Plc, Zenith Bank Plc, First City Monument Bank (FCMB), Stanbic and Wema bank
Leading the chart was Access Bank with a record N193.5 billion ($120.5 million) on technology infrastructure and electronic business in 2024, followed by GTCO which reported a 48 per cent rise in IT spending, recording N88 billion ($56.8 million) in the period.
Zenith Bank doubled its budget to N67.3 billion ($43 million), while UBA increased its spending by 107 per cent to N48 billion ($30.5 million).
Inflation amplified by exchange rate volatility, major upgrades to its core banking software Flexcube, cybersecurity enhancements, and expansion into Tanzania, Namibia, and Hong Kong, were some of the drivers of the surge in the tech spending.
Following the huge investment, Access Holdings recorded a 73 per cent drop in its fraud-related losses.
According to a report by TechCabal, Access Holdings said that its moves were necessary to support its growing digital customer base and fend off competition from fintech companies like Opay, PalmPay, and Moniepoint.
“Our technology spend reflects a deliberate balance between capital investments in new capabilities and operating expenses that support existing systems, such as subscriptions and service licenses.
“Approximately 80% of our operational IT costs are tied to licensing, 15% to support services, and the remaining portion to consultancy and professional services,” Access Holdings was quoted to have said in an email to TechCabal.
Access’s aggressive tech push leaves competitors trailing.
However, fraud losses in the sector showed the impact of these investments.
GTCO saw fraud losses fall slightly to N159.1 million ($99,421) from N198.8 million ($ 123,881). Zenith, however, recorded a spike, from N383.4 million ($238,914) to N5.26 billion ($3.3 million), underlining the need for better fraud prevention tools.
The rise of digital payments in Nigeria has led to an increase in financial transactions, which has been accompanied by a growth in fraud cases within the financial system.
In the first half of 2024, Nigeria’s financial institutions and other sectors recorded about 586,130 cyber attacks from various threat actors, according to a report released by Cybervergent, a foremost technology company providing automated cybersecurity solutions.
Of the 586,130 cyber threats detected, 226,103 were resolved by Cybervergent through automation; 19,920 endpoints were protected by Cybervergent, while the firm’s Security Operations Centre (SOC) analysed 304,522 events.
A report by the Financial Institutions Training Centre (FITC) noted that fraud-related losses in Nigeria rose to N10.1 billion across 19,007 cases in the third quarter of 2024, up from 1.18 billion across 12,066 cases in the same period of 2023.
However, on a quarter-on-quarter basis, the total amount dropped from N42.8 billion, suggesting some recent gains.
A report by the Nigeria Inter-Bank Settlement System (NIBSS), also showed that financial institutions in Nigeria lost N52.26 billion to fraud in 2024, representing a significant increase of N34.59 billion compared to the N17.67 billion recorded in 2023.
According to the report, the amount lost to fraud has increased by 196% over the past five years, in parallel with the growth of financial transactions in the digital payments sector.
Although the annual fraud count reported decreased by 31%, from 101,624 in 2020 to 70,111 in 2024, the amount lost to fraud grew by 350%, rising from N11.61 billion to N52.26 billion within the same period.
The report indicated that the ratio of total reported fraud value to the total value of transactions recorded over the last five years showed a decrease from 0.0053 per cent in 2020 to 0.0022 per cent in 2023, followed by an increase to 0.0040% in 2024.
The report also highlighted a 338 per cent increase in attempted fraud between 2023 and 2024, attributing this rise to system vulnerabilities at certain institutions.
Compared to the previous quarter, fraud activity increased in 2024, with attempted amounts and actual losses rising significantly in Q2 and Q3 before declining in Q4.
In 2023, a total of 80,658 unique customers fell victim to fraud, which is 4% less than the 84,130 customers recorded in 2022.
The NIBSS pointed out that this decline does not diminish the severity of the issue and urged the financial industry to remain vigilant, enhance security measures, and collaboratively address the persistent challenges posed by fraud.
The NIBSS also highlighted that individuals aged 40 and above continued to be the primary targets for fraudsters in 2023, mirroring the trend observed in the previous year.
In 2024, bank customers for many weeks struggled to access their funds due to the network disruptions that accompanied the core banking applications.
Banks including GTBank, Zenith, Access, and First among others took part in the system upgrade.
Zenith Bank faced similar challenges, with customers experiencing login issues for three days following an October 1 system update.
FirstBank customers encountered even longer delays, unable to access digital services for six days due to their upgrade.
