Nigerian bank customers are expected to experience increased service disruptions in the coming weeks and months as financial institutions implement system upgrades aimed at improving operational efficiency and enhancing customer experience.
While some banks have already begun their transitions, resulting in issues such as customers being unable to transact or access their funds, industry sources indicate that more banks are preparing to migrate to upgraded core banking systems as they strive to strengthen their technology infrastructure, according to Nairametrics.
One source mentioned that the upgrades are in response to a directive from the Central Bank of Nigeria, although others could not confirm this, suggesting that banks are primarily focused on improving their services.
Customers of tier-2 Sterling Bank were the first to face significant disruptions earlier in September, as the bank migrated its systems from T24 to SEABaaS, a new custom-built core banking application developed in Kenya. The outages lasted for several days, impacting customers’ ability to transact.
In a similar move, GTBank recently transitioned from its Basis/Banks software, provided by ICS Financial Services, to the Indian banking technology, Finacle.
Additionally, customers of Zenith Bank experienced a severe service outage on October 1. The bank later announced that it was conducting “routine IT maintenance,” but as of this report, customers have yet to fully recover from the service disruptions.
Zenith Bank is currently migrating its system from Phoenix, a software developed by London-based Finastra, to Oracle’s Flexcube.
As of Monday, many customers were still unable to access the bank’s app, despite the bank’s earlier announcement that services had been restored after making “significant progress” in its IT upgrade.
A source familiar with developments in the banking industry, who requested anonymity, disclosed that another tier-1 bank is in the process of migrating from its current core banking software to a new system, which will also impact millions of the bank’s customers. This transition is expected to contribute to ongoing service disruptions in the sector.
“The service disruptions are a bitter pill that the customers would have to swallow. Every bank wants its customers to carry out more transactions daily because that is where we make money from. But we must do what we have to do to improve the experience for the customers,” he said.
A backend developer at one of the tier-1 banks, who requested anonymity due to lack of authorization to comment, stated that the process of migrating to a new core banking application is complex and can take considerable time for any bank to stabilize after the transition. This highlights the challenges associated with such significant technological upgrades.
“Migrating to a new core banking system is not a switch off/switch on thing, it may take two weeks to one month because it involves the movement of customer biodata.
““In some cases, a bank may not need to move customer transaction data. However, for every change, the banks will need to integrate with their various channels such as ATM, USSD, internet banking, and so on and this is why it takes time for them to stabilize,” he said.
A core IT personnel from one of the top banks noted that the migration efforts by banks are driven by several factors, including security, flexibility, and cost.
He explained that, with the rising incidence of hacking targeting financial institutions, there is a growing demand for systems with enhanced security features.
Additionally, he pointed out that banks are seeking to reduce their expenditures on core banking applications, which often require significant dollar spending.
“Most of these core banking applications, after you buy, they implement for you, you pay yearly license per user most times, or you pay a global license. If you don’t pay global license, you also pay support. So, banks are also looking for a way to cut these costs,” he said.
On why customers are experiencing service disruptions in the process, he noted that it is impossible for banks to switch platforms without impacting their services.
“Let me break it down a little bit so you understand why it is impossible. Let’s say, for example, you buy a new phone that is better than your old phone, you will have to move your stuff to the new phone and you can’t do that with a snap of your fingers.
“I remember when I bought a new phone recently, it took me close to two weeks because after a while, I remembered something I needed and I had to go move it again from the old phone.
“Even if you’re using an iPhone and you have everything backed up on iCloud, it will still take a while for you to move it to your other new iPhone. So, moving data is a very critical part of the migration and it takes a lot of time before the banks can achieve stability,” he explained.
