Access Bank, others to invest N186bn on IT upgrades from offer proceeds
By Esther Agbo
Three leading Nigerian banks, GTCO, Access Holdings, and Fidelity Bank are set to allocate N186 billion ($244 million) from their recent public offerings to enhance their IT infrastructure.
This investment is part of their strategy to meet the Central Bank of Nigeria’s (CBN) new recapitalisation requirements.
The bank’s prospectuses disclose intentions to enhance their cybersecurity frameworks and purchase new software licences, motivated by a rise in electronic transactions and the growing occurrence of online fraud in Nigeria.
GTCO is at the forefront, planning to spend 26.6 percent of its projected N400.5 billion ($526 million) in public offer proceeds, approximately N98.5 billion ($129 million) on technology improvements.
Access Holdings aims to invest N68.6 billion ($90 million), or 20 percent of its anticipated N343 billion ($451 million), in IT infrastructure.
Fidelity Bank is dedicating 20 percent of its N95 billion ($125 million) in proceeds, around N19 billion ($25 million), to similar projects, focusing on cybersecurity, data analytics, and cloud services.
GTCO’s investment plan includes N70 billion ($92 million) for core banking systems, N15 billion ($20 million) for information security and fraud prevention, N6 billion ($8 million) for digital channel upgrades, and N7.5 billion ($10 million) for enterprise management solutions.
These upgrades are expected to be completed within 12 to 24 months.
Access Holdings will allocate N41.1 billion ($54 million) to network infrastructure and N27.4 billion ($36 million) to cybersecurity over 36 months.
Fidelity Bank plans to spend N9 billion ($12 million) on cybersecurity, N7.6 billion ($10 million) on software licences and hardware, and N2.3 billion ($3 million) on network infrastructure, with a 48-month timeline for completion.
Analysts emphasise the urgent need for Nigerian banks to upgrade their IT systems and cybersecurity measures. The rise in electronic transactions and cyber threats underscores the importance of these investments.
The Founder of SalesUltimo, Mr. Bello Muritala, noted that enhancing IT infrastructure will improve customer experiences and digital banking services.
“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.”
The CEO of Clane, Mr. Dipo Alabede, added that investing in technology and cybersecurity will streamline processes, reduce errors, and improve service delivery, while also helping banks safeguard sensitive data and comply with regulations.
He mentioned that a strong IT infrastructure underpins advanced digital banking services, such as mobile apps, online banking, and other digital payment solutions, which are crucial for banks to maintain and grow their customer base.
Recently, banks have faced competition from fintech companies, whose agile infrastructure allows them to scale faster than traditional banks. Companies like Opay, Palmpay, and Moniepoint now serve millions of customers who would have otherwise been bank clients if not for the presence of fintechs.
This competition is pushing banks to invest more in technology. However, some industry analysts argue that, apart from GTCO, which is allocating 26.6 percent of its funds to technology, the 20 percent set aside by other banks may be insufficient for the necessary IT infrastructure overhaul, given the evolving financial technology landscape, especially with the increasing use of Artificial Intelligence (AI) across various industries.
Overall, the three banks are expected to raise around N4.2 trillion in total during the recapitalization exercise, Based on the planned IT infrastructure investments, which average 20 percent of the funds raised, around N840 billion may be allocated to the IT sector.
This is expected to boost revenue for major tech companies like Amazon Web Services (AWS) and Microsoft Azure, which supply banks with cloud services.
Additionally, several local IT firms providing services to banks are also expected to benefit from this expenditure.
