As conventional banks faced prolonged network disruptions, transactions via mobile money applications surged by 69.58 percent, rising to N79.55 trillion from N46.91 trillion in 2023, as reported by the Nigeria Inter-Bank Settlement System (NIBSS).
Since 2020, the volume of these transactions has skyrocketed by 2,507.94 percent. In terms of transaction volume, mobile money activities increased by 28.74 percent, reaching 3.92 billion in 2024 compared to 3.04 billion in 2023. This represents a staggering 2,846.32 percent growth since 2020.
Overall electronic transactions reached N1.09 quadrillion in 2024, with instant transfers accounting for N1.08 quadrillion, indicating that banks still maintain a significant role. However, fintech companies are progressively capturing market share as consumers look for alternatives.
With banks struggling to manage the rising transaction volumes, Opay and PalmPay have become the preferred choices. By March 2023, these two apps were the most downloaded finance applications in Nigeria, with Opay being the top downloaded app by October 2023.
The Central Bank of Nigeria (CBN) has licensed 17 companies as non-bank mobile money operators, but Opay and PalmPay stand out as the most influential.
Chika Nwosu, managing director of PalmPay, recently highlighted that the fintech has amassed 35 million customers, with over 16 million active monthly users and a remarkable 99.5 percent success rate for transfers. Opay, boasting over 30 million users, credits its achievements to significant investments in IT, which enable rapid capacity expansion that outpaces traditional banking systems.
Lendsqr founder Adedeji Olowe observed that simplified, accelerated, and improved payment methods led to increased consumer reliance for daily transactions.
Some Nigerians indicate that they only rely on banks during critical situations. In October 2024, numerous traditional banks experienced system upgrades, which temporarily prevented many customers from making transfers.
Lagos-based trader Temiloluwa Abdulrazak stated that he was required to download PalmPay due to temporary unavailability of his banking application.
Olamide Eniola, a civil engineer, reported opening an OPay account in 2023 due to a week-long delay in salary access and maintains the account for routine transactions.
Lolade Akanji similarly stated that temporary GTBank app unavailability prompted her to open an OPay account, citing a desire to avoid such future disruptions.
Voriancorelli chairman and Cellulant co-founder Bolaji Akinboro notes that a significant portion of the Nigerian population utilizes mobile wallets provided by Opay or similar neobanks, enabling continued peer-to-peer transactions even during bank outages due to the contained ecosystem.
Banks recognize that the surge in electronic transactions, which has increased by 293.94 percent since 2021, has put significant pressure on their digital infrastructure. The World Bank highlighted this issue, indicating that the country's efforts to transition to a cashless system in late 2022 and early 2023 were unsuccessful due to insufficient digital capabilities.
In an article titled "Nigeria's Budding Digital Economy: Coping with Disruptive Technology," Flutterwave CEO Olugbenga Agboola noted that Nigeria's digital infrastructure is inefficient and expensive.
In light of these challenges, banks are making substantial investments in their digital infrastructure to bridge this gap and prepare for a fully cashless economy. This year, five banks are set to invest N248.21 billion in technology enhancements. “These upgrades will enhance banking capacity and address the rising demand for online banking,” remarked Olowe from Lendsqr.
At the 6th First Bank Fintech Summit, First Bank Chief Executive Officer Olusegun Alebiosu stressed that the banking industry's future is digital.