Business
Recapitalisation: Capacity challenges plague banks, as IT staffers relocate in droves
Nigerian banks are increasingly beset by capacity constraints that have begun eroding service quality and triggering a surge in customer complaints. Capacity-building—developing the skills, processes, and resources an organisation needs to thrive—requires a deep, internally driven transformation of mindsets as well as systems.
Yet many domestic lenders, already under pressure from the Central Bank of Nigeria’s latest recapitalisation mandate of ₦500 billion for international banks and ₦200 billion for national banks, are struggling to keep pace.
Recent data reveals how serious the problem has become. Customer complaints lodged with five leading banks—Access Holdings, United Bank for Africa, Zenith Bank, Guaranty Trust Holding Company, and Wema Bank—rose by 63.5 percent to more than 10 million in 2023, up from 6.12 million the previous year. More than half of these grievances were directed at a single tier-1 institution. By June 2023 the year-on-year volume of complaints had jumped 117 percent to 6.87 million, while the value of financial claims tied to those disputes surged 289 percent to ₦326.11 billion, compared with ₦83.78 billion a year earlier.
The Central Bank’s 2022 directive requiring lenders to expand ATM help desks into comprehensive customer complaint hubs has not halted the flow.
Analysts cite ageing technology, inadequate cyber-security, and human-capital shortages exacerbated by an exodus of skilled professionals seeking opportunities abroad. Meeting ever-tighter regulatory and compliance demands further strains limited resources, while weak rural infrastructure and gaps in credit-risk management leave banks vulnerable on multiple fronts.
They opined that without meaningful investment in modern core-banking platforms, robust cyber-defences, and specialised talent, Nigerian banks risk undermining both the recapitalisation effort and public confidence in the sector.
As Nigerian banks embark on recapitalisation efforts amid macroeconomic uncertainties, capacity and technology challenges continue to undermine service delivery. Group Managing Director of Guaranty Trust Holding Company (GTCO), Segun Agbaje, had in 2024 said that the banking industry was overwhelmed in the first quarter of 2023 due to system limitations.
He stated, “It’s like a factory. You thought you had 100% capacity, but ultimately you realized you didn’t,” referencing the service disruptions that affected customers across several platforms.
Agbaje attributed part of the challenge to a conservative approach in provisioning for potential risks, which saw the Expected Credit Loss (ECL) model nearly double. He explained, “We’re basically looking at the macros and we’re saying that there could be potential problems,” which is why GTCO’s coverage ratio rose to 175%. He added that the bank may reduce it to 100% by year-end if conditions remain stable.
To address operational setbacks, GTCO is set to overhaul its core banking infrastructure, aiming for a more scalable system capable of absorbing future transaction spikes. The bank plans to move from a system that handles ten users to one that can accommodate a hundred. This decision follows the realization that the bank’s IT system lacked the necessary breadth to meet growing digital demands.
However, technology upgrades alone may not be enough. Agbaje highlighted the growing attrition among IT professionals, who are increasingly drawn to fintechs and overseas opportunities. While competitive salaries help, he stressed that banks must also foster better working conditions and career satisfaction. He noted that while GTCO had managed attrition better in 2023 than in the previous year, broader national issues still drive talent out of the country.
At the recent Central Bank of Nigeria (CBN) seminar themed “Banking Recapitalisation Towards a Trillion Dollar Economy,” financial leaders emphasized that Nigeria’s journey toward global economic relevance must begin with strengthening the capacity of its banking institutions.
Speaking at the event, Group Managing Director of United Bank for Africa (UBA) Group, Oliver Alawuba, said the pressing need is for banking assets to grow to at least 80%–100% of GDP. He stated, “Without deepened banking capacity, the trillion-dollar economy dream will remain a mirage.”
As digitalisation sweeps through Nigeria’s financial sector, it brings with it new threats that expose cybersecurity gaps. Stakeholders at the seminar noted that increased digital activity must be matched with robust cybersecurity measures and strategic investments in risk management.
The ability to detect, prevent, and respond to cyber threats was described as a foundational necessity for banks to remain resilient post-recapitalisation.
Alawuba also stated that capacity building in the financial sector cannot be limited to capital and technology alone. A strong emphasis was placed on developing human capital and promoting sustainability finance.
In particular, banks were urged to prioritize upskilling their workforce to effectively drive industrialization and diversify Nigeria’s economy beyond oil—a key ingredient in achieving long-term competitiveness.
Former President of the Chartered Institute of Bankers of Nigeria (CIBN), Mazi Okechukwu Unegbu, who spoke to Business Hallmark on telephone expressed serious concerns regarding the deteriorating relationship between bank employees and their employers, which he believes stems from a systemic neglect of employee welfare and professional development. In a conversation with Business Hallmark, Unegbu highlighted that the banking sector’s growing emphasis on profit margins at the expense of staff well-being has fostered an environment conducive to corruption and inefficiency.
He pointed out the neglect of structured training programs that were once essential for instilling professional ethics, loyalty, and competence within the workforce. Unegbu noted that the lack of consistent capacity-building initiatives has resulted in an increase in costly mistakes and unethical practices, such as customer account mismanagement and rising disengagement among staff. “These issues reflect a workforce that feels undervalued and unsupported,” he commented.
Advocating for urgent reforms, Unegbu urged banks to adjust employee compensation to reflect current economic realities and to reinstate comprehensive training and development frameworks. “Prioritizing the welfare of employees and investing in long-term capacity-building initiatives can help the industry slowly regain its credibility and operational excellence,” he asserted.
Additionally, a former Chief Executive Officer of a leading bank, who opted to remain anonymous, acknowledged a significant capacity gap in Nigeria’s banking sector, attributing this deficiency as a major reason for service inefficiencies experienced by customers nationwide. He remarked that, despite ongoing efforts to remedy these issues, the sector continues to contend with the repercussions of years of neglect in both infrastructure and human capital investment.
He also emphasized that the capacity challenge extends beyond banking, affecting multiple sectors within the Nigerian economy. “This is a systemic problem,” he stated, noting that the technological and operational deficiencies seen in banking are also prevalent in other industries, all of which depend increasingly on digital systems for productivity and service delivery.
Despite these challenges, the former bank executive commended the Central Bank of Nigeria (CBN) for its proactive regulatory measures aimed at stabilizing the financial system. He stressed that, especially given the current economic pressures on the government, it is critical for the CBN to continue bolstering institutional capacity and maintaining public trust in the nation’s financial institutions.
The 2007/2008 global financial crisis highlighted significant structural weaknesses in Nigeria’s financial system, with a major factor being the widespread lack of institutional and human capacity within the banking sector. During the rapid expansion of Nigerian banks—often spurred by aggressive mergers and acquisitions post-2005 recapitalisation—the necessary internal competencies to manage risk, evaluate complex assets, and ensure effective corporate governance were not sufficiently developed.
Many bank executives were unprepared, lacking the expertise to consider the long-term consequences of high-risk lending practices, particularly in volatile sectors like oil and gas, real estate, and capital markets. This capacity gap extended to regulatory bodies as well. Although the Central Bank of Nigeria (CBN) advocated for strengthening capital, it fell short in fostering the skills and systems required for real-time supervision of a complex financial landscape. Consequently, many banks resorted to unethical practices, such as misrepresenting financial positions and granting unsecured loans to related parties, while regulators struggled to detect these issues in time.
When the global financial crisis struck and oil prices collapsed, Nigeria’s banking sector found itself poorly equipped. The ensuing liquidity crisis and rise in non-performing loans revealed the vulnerability of institutions that had relied on inadequate credit risk assessments and speculative investments. As public confidence quickly eroded, the CBN intervened in 2009, leading to a comprehensive audit of banks, the removal of several CEOs, and an injection of over ₦600 billion into the sector to prevent systemic failure.
The crisis imparted a critical lesson: mere capital cannot ensure a stable financial system—true stability hinges on capacity. The need for skilled professionals, ethical leadership, and robust internal controls became evident, emphasizing the importance of continuous investment in human capital development, regulatory reforms, and technology-driven risk management. In today’s fast-evolving digital financial landscape, these lessons remain crucial.
