Nigeria’s banking industry is poised for a significant structural shift, with market size projected to reach $16 billion by 2030, underpinned by consolidation, accelerated digital adoption, and tighter regulatory oversight, a new report by McKinsey & Company has indicated.
The outlook comes against the backdrop of far-reaching reforms, including a substantial increase in minimum capital requirements and a gradual transition toward more sustainable revenue models, as regulators move to reinforce the sector’s resilience amid persistent macroeconomic volatility.
Despite these pressures, Nigerian banks continue to rank among the most profitable on the continent, outperforming regional peers on the back of elevated interest rates, aggressive loan repricing strategies, and strong foreign exchange gains.
The report identified foreign exchange liberalisation as a key contributor to recent earnings growth, noting that, following the 2023 reforms, the country’s top five banks generated over $1.7 billion in FX-related income, equivalent to about 40 per cent of total operating income.
However, it added that regulators have since taken steps to curb excessive reliance on such windfalls.
Also, McKinsey & Company explained that Nigeria’s growth outlook is also tied to structural shifts in revenue composition.
While corporate banking accounted for the largest share of new revenue between 2019 and 2024, the retail and SME segments recorded faster growth rates, supported by expansion in digital payments and agency banking.
The report highlighted the rapid rise of financial technology firms as a key competitive pressure, with fintechs now ranked among leading merchant acquirers, and increasingly competing with traditional banks across payments, savings, and business services.
These firms, it said, are leveraging digital channels to scale quickly, targeting individuals, agents, and small businesses. In response, banks have increased spending on technology, with annual software and e-banking investments running into tens of billions of naira per institution.
“Despite currency volatility, Nigerian banks are highly profitable, surpassing the African average due to repriced loans, higher interest rates, and stronger foreign-exchange gains. Nigeria’s banking market is forecast to grow at a 7 per cent Compound Annual Growth Rate (CAGR), reaching about $16 billion by 2030.
“Between 2019 and 2024, corporate banking accounted for the largest share of new revenue growth in Nigeria’s banking sector; however, the retail and SME segments grew faster, leveraging digital payments and agency banking to capture previously untapped markets.
“While the Nigerian market is less concentrated than some, consolidation is increasing. Between 2019 and 2024, the top banks increased their domestic asset share from 59 per cent to 64 per cent,” it added.
The report argued that the Nigerian banking sector over the past five years has been affected by macroeconomic shocks, increased regulation, and the maturation of digital disruption.
A weaker local currency, it maintained, has driven a revenue drop in dollar terms, but noted that top banks are mitigating this by expanding into new markets, with, for example, Access Bank’s foreign operations now accounting for 23 per cent of the bank’s total operating income.
Additionally, McKinsey highlighted that the central bank has significantly raised capital requirements from $33 million (50 billion naira) to $330 million (500 billion naira) for international banks, and from $16 million (25 billion naira) to $130 million (200 billion naira) for national banks by March 2026 and halted capital distributions for banks under forbearance to strengthen balance sheets and build resilience in the sector.
“A key feature of the landscape has been the evolution of fintechs like OPay and Moniepoint into major players that now rival traditional banks. OPay has surpassed 50 million downloads on the Google Play store, while Moniepoint ranks among the leading merchant acquirers, rivaling traditional banks in user adoption.
“Both companies offer savings wallets, debit cards, and business tools, building attractive ecosystems where individuals, agents, and SMEs alike want to stay. Traditional banks are responding by investing heavily in IT and digital in response. Recent filings show tens of billions of naira per bank per year in software additions and IT/e-banking expenses,” the report pointed out.
To navigate this dynamic and shifting environment, McKinsey stressed that Nigerian banks are building reliability and scale, and embracing the digital reality to reach new consumers, notably young, digitally native Nigerians and micro-, small, and medium-size enterprises (MSMEs).
With Nigeria’s digital shift underpinned by strong demographic and connectivity trends, it stressed that the country has more than 160 million active internet subscriptions, while over 60 per cent of the population is under the age of 25, creating a large, digitally active customer base.
The introduction of the open banking framework, according to McKinsey, is expected to intensify competition further by enabling customers to share financial data across institutions, allowing new entrants to build integrated services on top of existing banking infrastructure.
Across Africa, the report stated that similar growth dynamics are evident, with the continent’s banking sector expanding at a compound annual growth rate of about 17 per cent between 2020 and 2024 in constant currency terms, compared with a global average of 7 per cent.
However, currency depreciation significantly reduced headline performance, it said, noting that in dollar terms, African banking revenues grew from $81 billion in 2020 to $99 billion in 2024, representing a CAGR of 5.2 per cent, in line with global averages.
Within the continent, the industry, it said, remains highly concentrated, with about 70 per cent of total revenue generated by five markets—South Africa, Nigeria, Egypt, Kenya, and Morocco. South Africa alone accounted for more than $26.4 billion in banking revenue in 2024 it added.
The report estimated Africa’s total banking market size at approximately $107 billion in 2025, highlighting both its scale and growth potential despite structural constraints,” the report explained.
“Strong fundamentals position African banking to sustain, and perhaps even increase, its profitable streak. With a total market size of around $107 billion in 2025, Africa’s banking market is sizeable yet highly concentrated,’’ the report said.
Looking ahead, it emphasised that growth in Nigeria is expected to be driven by increased financial inclusion, expansion of digital ecosystems, and deeper penetration of the SME segment.
However, it explained that risks remain from persistent inflation, exchange-rate volatility, and low per capita income levels, noting that Nigerian banks will need to balance growth with financial discipline, scale operations through consolidation, and invest in data and technology capabilities.
