Nigeria’s banking industry is set for a dynamic start to 2026, with three significant mergers anticipated as smaller lenders scramble to meet the Central Bank of Nigeria’s (CBN) new minimum capital requirements ahead of the 31 March deadline. The projected consolidations are expected to reshape the sector, as banks seek both regulatory compliance and operational resilience in an increasingly competitive market.
According to DataPro’s 2026 Banking Sector Prospects in Nigeria report, most tier-1 banks had already met the new capital threshold by the end of 2025, leaving smaller institutions under mounting pressure to shore up their balance sheets. Idris Shittu, DataPro’s Enterprise Risk Management analyst, explained that the regulatory push has spurred an active mergers-and-acquisitions (M&A) environment, but warned of potential pitfalls.
“Post-merger integration challenges, including IT system harmonisation, cultural alignment, and the migration of non-performing loans, could strain newly merged entities, especially among smaller banks,” Shittu said. “The looming recapitalisation deadline has also sparked ‘War Room’ discussions focused on deal execution and risk mitigation.”
Shittu outlined what he described as a “triple threat” facing Nigerian banks in 2026. First, regulatory tightening, including the 45 per cent Cash Reserve Ratio (CRR), continues to restrict liquidity and sterilise nearly half of naira deposits. Second, capital pressure drives consolidation, increasing merger-related risks. Third, rapid technological disruption from agile fintech competitors demands urgent digital transformation.
On the fintech front, Shittu highlighted the growing influence of companies such as Moniepoint and Opay, which are capturing market share from retail customers and SMEs. He noted that 2026 could become a turning point as traditional banks evolve into lifestyle “super-apps,” integrating services like flight bookings, food delivery, and other everyday conveniences directly into banking platforms.
“Legacy systems and slow procurement cycles make agility a challenge for traditional banks,” he said. “To remain competitive, banks will need to innovate rapidly—either through strategic fintech acquisitions or by spinning off autonomous digital subsidiaries capable of operating at fintech speed.”
The consolidation trend, Shittu predicts, will likely shrink the number of banks in Nigeria by the end of 2026. While this promises a more resilient financial system able to support larger transactions and national economic growth, he cautioned that integration risks remain significant. “Past consolidation efforts, such as those in 2005, highlight potential pitfalls, from IT system failures to cultural clashes, particularly when conservative Tier-1 banks merge with aggressive Tier-2 acquirers,” he noted.
Shittu emphasised that successful consolidation will depend on thorough due diligence, particularly around asset quality, cultural fit, and post-merger integration planning.
In contrast, PwC’s Nigeria Economic Outlook – January 2026 takes a more optimistic view. The consultancy points to regulatory initiatives, fintech evolution, and growing cross-border investor interest as drivers of sector growth. PwC highlighted that strong demand for modern financial products, credit expansion, and anticipated capital market growth—including the projected N262tn market from listings such as Dangote Refinery and NNPC—will deepen liquidity and sustain interest across banking, fintech, and insurance.
The technology trajectory also looks promising. PwC noted accelerated adoption of AI and blockchain in 2025, used for personalised services, fraud detection, and operational efficiency, alongside innovations in insurtech to expand access and product innovation. This momentum, it said, is expected to continue in 2026, supported by growing investment, developer talent, and the rise of embedded finance solutions.
As Nigerian banks navigate recapitalisation pressures, consolidation, and technological disruption, 2026 is shaping up to be a year of both challenge and opportunity—one that could redefine the country’s banking landscape while accelerating the transition toward digital-first financial services.