Nigeria Banks Shut 229 Branches: What It Means for the Banking Industry and Customers

Nigeria’s banking landscape continues to evolve as digital transactions reshape how financial services are delivered.

Data from the Central Bank of Nigeria (CBN) shows that banks recorded a net closure of 229 physical branches in 2024, shrinking the total number nationwide from 5,373 to 5,144 across commercial, merchant and non-interest banks operating in the 36 states and the Federal Capital Territory.

This occurred even as the number of licensed banks rose from 33 to 35, underlining a clear shift away from brick-and-mortar banking toward digital and agent-led models.

Electronic payments expanded rapidly during the period, with Point of Sale (POS) transactions driving growth. Transaction volumes climbed by 33 per cent to 13.08 billion in 2024, while values more than doubled to ₦223.27 trillion.

By contrast, ATM usage recorded only marginal growth, reinforcing the dominance of POS terminals in day-to-day payments.

The momentum carried into 2025, with POS transaction values surpassing ₦88 trillion within the first eight months, reflecting exponential growth linked to wider agent networks and deeper mobile wallet integration. Branch distribution remained uneven across states.

Lagos continued to host the largest number with 1,521 branches, despite a slight decline, while Ebonyi experienced the steepest contraction, falling to just 31 outlets. Delta and Rivers bucked the trend by adding branches, reflecting local economic activity.

However, the transition has not been without friction. Cash shortages toward the end of 2024 led POS agents to significantly increase service charges, prompting the CBN to impose ₦1.35 billion in fines on nine banks over ATM service failures.

By mid-2025, leading institutions such as First Bank still maintained extensive branch networks, but overall figures point to a sustained national contraction as digital adoption deepens.

Implications for the Banking Industry

For banks, the closure of branches reflects a strategic effort to cut operating costs and redirect resources toward digital infrastructure, innovation, and partnerships with fintech firms.

Competition has intensified as fintech players such as OPay and Moniepoint continue to gain market share, outperforming traditional banks in customer experience metrics like speed, ease of use, and service expectations, according to the 2025 KPMG West Africa Banking Industry Customer Experience Survey.

The survey highlights stagnation or slight declines in customer experience among traditional banks, particularly in the SME and corporate segments, where rigid structures and frequent transaction failures remain challenges.

At the same time, recapitalisation efforts are strengthening balance sheets, with several banks meeting new capital thresholds.

The CBN projects a capital adequacy ratio of 11.60 per cent and liquidity levels of 65.00 per cent in 2026.

Despite these improvements, risks persist. Non-performing loans have risen to about 7.00 per cent, while cybersecurity threats continue to grow alongside digital expansion.

Regulatory changes around POS operations and the rollout of open banking frameworks are also reshaping competitive dynamics, forcing banks to innovate or risk losing relevance in an increasingly cashless environment.

What it means for Customers

For customers, the digital shift has brought greater convenience and broader access to financial services.

Mobile banking usage rose to 69 per cent on a weekly basis in 2025, up from 58 per cent the previous year, while total electronic payment values reached ₦1.07 quadrillion in 2024 and continued to climb in 2025.

Agency banking and POS services have improved proximity to banking services, especially in underserved areas.

However, customer expectations have risen sharply. Failed transactions, delays, and high service charges remain key pain points, particularly during periods of cash scarcity when fees reportedly doubled.

Trust has become a critical factor, as fraud losses climbed to ₦52.26 billion in 2024, leaving many users concerned about digital security despite the use of biometrics and transaction alerts.

Small and medium-sized enterprises have been particularly affected, with modest declines in customer experience driven by credit bottlenecks and service disruptions.

Many SMEs are increasingly turning to fintech platforms for quicker loans and more flexible support.

Meanwhile, rural users and individuals with low digital literacy face the risk of exclusion if infrastructure and education do not keep pace
With innovations

What next going forward

Looking ahead to 2026, the CBN projects stronger macroeconomic conditions, with GDP growth expected to rise to 4.49 per cent and inflation easing to 12.94 per cent, supported by exchange rate stability, oil production of 1.71 million barrels per day, and ongoing fiscal reforms.

Within the banking sector, the focus is expected to remain on digital resilience, open banking ecosystems, and the use of artificial intelligence to deliver more personalised and proactive services.

Digital payment volumes are projected to continue growing, although risks linked to global geopolitics, oil price volatility, and cybercrime could disrupt progress.

Industry analysts recommend sustained investment in cybersecurity, simplified customer journeys, and targeted SME support to strengthen trust and inclusion.

With initiatives such as EFEMS and PAPSS improving cross-border payment efficiency, Nigeria’s banking sector is positioned to play a larger role in economic growth, provided it successfully navigates the challenges of a rapidly digitising financial system.