Nigerian Banks Set to Boost Digital Lending and Tech with Recapitalisation Funds – McKinsey
Nigerian banks are poised to channel newly raised recapitalisation funds into technology upgrades, digital lending, and expansion into non-banking services, McKinsey & Company has revealed. The insight came from Mayowa Kuyoro, Partner and Financial Services Lead for Africa at McKinsey, during the firm’s maiden Media Day in Lagos on Tuesday. According to Kuyoro, banks that invest in technology and consumer-focused services are likely to stay ahead in an increasingly competitive sector.
The recapitalisation drive follows a March 2024 directive from the Central Bank of Nigeria (CBN), requiring banks to increase their minimum share capital by April 2026. The move is aimed at strengthening banks’ resilience against financial shocks, supporting economic growth, and advancing Nigeria’s goal of achieving a $1 trillion economy. Under the mandate, commercial banks with international licences must raise N500 billion, national commercial banks N200 billion, merchant banks N50 billion, and non-interest banks between N10 billion and N20 billion depending on their scope.
Kuyoro highlighted four key areas where the fresh capital is expected to be deployed. “Seamless customer experience has become non-negotiable. Banks that channel recapitalisation funds into technology will be the ones that stay ahead of the curve,” he said. He also noted that digital lending would likely see a significant boost, with banks lending more aggressively to consumers while managing risk with robust models.
Beyond core banking operations, some banks operating under holding company structures are expected to strengthen their non-bank subsidiaries, particularly in asset management and insurance. Kuyoro explained that the recapitalisation gives Nigerian banks the balance sheet strength to explore international expansion across Africa and beyond. He added that for banks unable to raise the required capital, survival will depend on mergers, a trend already beginning to emerge in the sector.
With roughly six months remaining before the April 2026 deadline, several banks have successfully met the recapitalisation requirements, while others are in the second phase of capital raising. Analysts say the strategy will likely accelerate the adoption of digital banking services and transform the financial landscape in Nigeria, creating opportunities for both consumers and investors.
source: punch