Nigeria’s banking sector recorded a significant contraction in its physical presence over the past year as Deposit Money Banks shut down 229 branches nationwide, reflecting a growing shift by customers away from banking halls towards Point of Sale transactions.

This development was disclosed in the Central Bank of Nigeria’s 2024 financial sector statistical bulletin, which showed that the total number of bank branches declined from 5,373 in 2023 to 5,144 in 2024.

The data covers branches and cash centres operated by commercial, merchant and non-interest banks across the 36 states of the federation and the Federal Capital Territory.

Despite the widespread closure of physical branches, the number of licensed banks in the country increased from 33 in 2023 to 35 in 2024, suggesting that banking services are increasingly migrating from brick-and-mortar locations to digital and electronic platforms.

According to the report, POS terminals have emerged as the most widely used channel for daily financial transactions across the country.

POS transaction volumes rose sharply from 9.85 billion transactions in 2023 to 13.08 billion transactions in 2024.

This increase represents an additional 3.23 billion transactions, amounting to a growth rate of approximately 33 per cent within one year.

The value of POS transactions also surged significantly during the same period, more than doubling from N110.35 trillion in 2023 to N223.27 trillion in 2024.

Automated Teller Machine usage recorded modest growth by comparison, indicating a slower pace of adoption relative to POS terminals.

ATM transaction volumes increased slightly from 1.01 billion transactions in 2023 to 1.02 billion transactions in 2024.

The value of ATM transactions also rose marginally, moving from N28.21 trillion to N29.12 trillion over the same period.

These figures underline the growing dominance of POS terminals in Nigeria’s payment ecosystem, surpassing both ATM withdrawals and physical visits to bank branches as the preferred means of conducting daily transactions.

Lagos State retained its position as Nigeria’s primary banking hub in 2024, with a total of 1,521 bank branches.

However, this figure represents a slight decline from the 1,532 branches recorded in the state in 2023.

Ebonyi State recorded the steepest decline in bank branch numbers nationwide, losing 89 branches as its total fell sharply from 120 in 2023 to just 31 in 2024.

Other states that experienced notable reductions include Oyo State, which lost 26 branches, Niger State with 32 closures, Ekiti State with 18 closures, and Ondo State, which also lost 18 branches.

The Federal Capital Territory was not exempt from the trend, losing nine branches as its total declined from 400 in 2023 to 391 in 2024, indicating that branch closures were not limited to rural or less commercial areas.

In contrast, some states recorded modest growth in branch numbers despite the national decline.

Delta State added six new branches during the period, while Rivers State recorded an increase of eight branches.

Edo, Kaduna and Kano States also experienced growth, with each state adding eight new bank branches.

Analysts noted that the limited branch expansion observed across a few states is now largely concentrated in areas with rising population density and increasing commercial activity, even as the overall national branch count continues to shrink.

A 2025 KPMG West Africa Banking Industry Customer Experience Survey highlighted growing customer sensitivity to bank charges, service reliability and transaction security.

The report stated, “Customer experience in the SME segment remained largely stagnant, recording a marginal decline compared to last year.”

It further noted, “While fintech leaders such as OPay and Moniepoint continued to post gains, these improvements were not enough to offset the broader downturn driven by traditional banks.”

KPMG also observed that, “Across the six pillars of customer experience, fintechs continue to outperform traditional banks, particularly on time and effort and expectations.”

The sharp increase in POS usage also coincided with widespread cash shortages across the country.

In December 2024, POS charges reportedly doubled in some locations, with agents collecting as much as N200 for every N5,000 cash withdrawal.

During the same period, many bank ATMs were reportedly empty, leaving customers with little choice but to depend on POS operators for access to cash.

In response, the Central Bank of Nigeria sanctioned nine Deposit Money Banks for failing to ensure adequate cash availability through their ATMs during the festive season.

The apex bank imposed fines totalling N1.35bn, with each affected bank fined N150m.

The CBN stated that the fines would be deducted directly from the affected banks’ accounts.