The focus of Nigerian leading banks in 2022 was on software acquisition, as they responded to the demands of digital transformation and remote banking due to the Covid-19 pandemic. Access Bank stood out with a 128% surge in software spending compared to the previous year, while Zenith Bank maintained its investment in software.
Although UBA and GTCO recorded varying changes in their software spending, a significant proportion of their software expenditure still went to foreign providers. This underscores the importance of greater investment in local IT companies for Nigerian banks to reduce reliance on foreign vendors and promote the growth of the local tech ecosystem.
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The cost of software Acquisition increased significantly
Investments made by companies have a broad scope that encompasses several areas, such as core banking systems, customer relationship management (CRM) software, mobile banking, and payment applications. Additionally, investments are also being made in anti-fraud and security software, risk management systems, business intelligence and analytics tools, electronic document management systems (EDMS), and treasury and capital market software.
As new technological innovations, including artificial intelligence, Web 3, IoT, blockchain, digital identity, and cloud computing, emerge, companies are increasing their IT spending to stay current with these trends. The focus on technology investment remains strong, as these innovations continue to drive the need for more technology-related investments.
The House of Representatives recently passed a motion urging the CBN to direct commercial banks to overhaul their existing online/electronic banking platforms to improve the efficiency of electronic banking operations.
The impact of the Covid-19 pandemic has significantly influenced the spending patterns of banks regarding software acquisition, with a particular emphasis on skill acquisition. The pandemic has caused a rapid shift in consumer behavior, forcing banks to adapt to the new normal of remote and digital banking.
To facilitate remote operations, ensure seamless digital customer experiences, and enhance cybersecurity measures, banks have recognized the need to invest in software solutions. This includes robust mobile banking applications, secure payment gateways, and reliable digital platforms.
In addition, banks are investing heavily in data analysis and business intelligence tools to gain insights into changing customer preferences, identify emerging risks, and make informed decisions in an uncertain economic environment.
Conclusion
To maintain productivity and protect sensitive financial data, banks are also focusing on skill acquisition to ensure a seamless and secure remote working environment for their employees.
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