Digital Banking, Insecurity Force Closure Of 592 Bank Branches In 11 Years

BY BUKOLA ARO-LAMBO, Lagos AND HENRY TYOHEMBA, Abuja

Deposit Money Banks (DMBs) have shut no fewer than 592 branches and cash centres across Nigeria between 2014 and 2025, with the pace of closures accelerating sharply in the last three years, according to data from the Central Bank of Nigeria’s (CBN) 2025 Statistical Bulletin for the Financial Sector.

The data showed that the number of DMB branches and cash centres declined from 5,526 in 2014 to 4,934 in 2025. Of the total reduction, 476 locations, representing about 8.8 per cent, were closed between 2022 and 2025, with about 92 per cent of that decline occurring in 2024 and 2025.

Analysts attributed the closures to a combination of factors, including the growing adoption of electronic transactions, the expansion of agency banking networks and rising insecurity in parts of the country, including bank robberies and other social vices.

Economic experts, however, warned that the rapid reduction in physical banking infrastructure could deepen financial exclusion, particularly in communities where customers still depend heavily on branches for basic banking services.

The shift also reflects banks’ growing reassessment of the profitability of maintaining traditional brick-and-mortar branches. With mobile banking, USSD, electronic transfers and agency banking increasingly handling routine transactions, banks can serve customers through alternative channels at lower operating costs.

Banking agents using point-of-sale (POS) terminals have also expanded access to basic services such as deposits and withdrawals, particularly in areas where bank branches are limited.

Data from the Nigeria Inter-Bank Settlement System (NIBSS) underscored the rapid growth of POS banking. POS transaction value increased by 79.03 per cent year-on-year in the first quarter of 2026, rising from N10.49 trillion in the corresponding period of 2025 to N18.78 trillion between January and March 2026. This represents an average of about N208.7 billion processed through POS terminals daily during the 90-day quarter.

The decline in bank branches was widespread, with 27 states recording fewer branches over the period, while nine states recorded increases. Bauchi remained unchanged.

The South West recorded some of the sharpest declines. Oyo State posted the largest reduction, with the number of bank branches falling from 347 in 2014 to 196 in 2025, a decline of 151 branches.

Lagos, however, recorded a marginal increase, from 1,442 branches in 2014 to 1,444 in 2025, while Ogun gained 44 branches, rising from 137 to 181.

In the South East, Enugu recorded a decline from 158 branches in 2014 to 118 in 2025, a reduction of 40. Abia fell from 144 to 117, while Anambra declined from 219 to 196. Ebonyi dropped from 59 to 32, while Imo declined from 106 to 96. None of the states in the region recorded an increase.

In the South South, Cross River lost 32 branches, falling from 79 in 2014 to 47 in 2025. Rivers declined from 292 to 275, while Edo dropped from 174 to 168. Delta, however, recorded an increase from 178 to 196 branches, while Bayelsa fell from 38 to 31.

In the North Central, the Federal Capital Territory recorded a decline from 380 branches in 2014 to 362 in 2025. Kogi dropped from 84 to 68, while Kwara fell from 104 to 74.

Benue was among the states that recorded an expansion, increasing from 47 branches to 61. Nasarawa rose from 47 to 55, while Niger increased from 67 to 74. Plateau, however, declined from 75 to 61.

In the North East, Borno recorded a decline from 80 branches in 2014 to 56 in 2025, while Gombe fell from 42 to 31. Taraba declined from 39 to 26. Adamawa, however, expanded its branch network from 47 to 59.

The North West also recorded significant reductions. Kano’s branch network fell from 174 to 157, while Kaduna declined from 157 to 146. Katsina dropped from 73 to 50, Kebbi from 38 to 34, Jigawa from 43 to 37 and Zamfara from 33 to 28.

Sokoto was among the few states to record an increase, with its branch network rising from 43 in 2014 to 45 in 2025. Akwa Ibom also expanded from 72 to 90 branches, representing an increase of 18.

Speaking in an interview with LEADERSHIP yesterday, an economic expert in the Department of Economics, University of Nigeria, Nsukka, Dr Tony Orji, described the development as part of a structural shift towards digital banking but warned that it could pose a financial-inclusion risk if not properly managed.

Orji said the closure of branches should not automatically be interpreted as declining access to banking, stressing that the key issue was whether digital and alternative channels were effectively replacing the services previously provided by physical branches.

He said, “The CBN’s policy direction reflects both banking-sector transformation and a potential financial-inclusion challenge. Branch closures should not, however, be interpreted automatically as declining access to banking.

“The critical issue is whether digital and alternative channels are effectively replacing the services previously provided through physical branches.”

Orji noted that banks had strong incentives to reduce their dependence on physical branches because mobile banking, USSD, POS, agency banking and electronic payments enabled them to serve customers at lower operating costs.

However, he said Nigeria was still far from being a completely digital economy, with rural residents, elderly people, low-income earners, small traders and people with limited digital literacy continuing to depend significantly on physical banking facilities.

He also stressed the importance of the geographical distribution of bank branches in assessing the impact of the closures.

“While Lagos lost 158 banking locations between 2022 and 2025, it still had 1,444 locations in 2025. In contrast, states such as Yobe, Taraba and Zamfara had only 23, 26 and 28 locations respectively.

“Therefore, closing an underutilised branch in a highly banked urban centre is fundamentally different from closing one of the few banking outlets serving a rural or underserved community,” he added.

Orji described the trend as “digital transformation with a financial-inclusion warning,” saying the objective should not necessarily be to preserve every physical branch but to ensure that customers had access to reliable, affordable, secure and accessible alternatives whenever a branch was closed.

He identified greater convenience for digitally capable customers, increased reliance on agents and POS operators, rising cybersecurity risks, lower operating costs for banks and a changing role for physical branches as some of the likely implications of the trend.

He added that branches might increasingly focus on complex transactions, relationship management, business advisory services and customer support, while routine transactions moved online.

“In sum, I would not regard the closure of 476 banking locations as inherently negative. A modern banking system does not necessarily require thousands of physical branches if customers can access reliable financial services through digital platforms, USSD and agency networks.

“The concern is that digital banking should not become a substitute for financial inclusion; it should be an instrument for achieving it,” he added.

He further warned that if branches disappeared faster than alternative channels developed, Nigeria could end up with a two-tier financial system, consisting of highly digitised banking for connected urban customers and increasingly limited access for rural and digitally excluded Nigerians.

He therefore advocated a banking model based on branches, digital platforms and agency banking, with each channel serving customers according to their needs and circumstances.

Also speaking, an economist and staff member of the Benue State Board of Internal Revenue, Julius Moji, said the growing preference for digital transactions was changing the economics of banking but warned that branch closures could have wider implications for financial inclusion.

Moji said banks were increasingly responding to changing customer behaviour as more transactions were conducted through mobile applications, transfers, USSD platforms and other electronic channels.

“Banks are responding to the reality that a large proportion of their customers no longer need to visit a branch for routine transactions.

“From the banks’ perspective, maintaining a physical branch comes with significant costs, while digital platforms allow them to serve more customers at a lower operational cost.”

However, he cautioned that the reduction in physical banking infrastructure could create challenges for customers who were less digitally connected.

“The concern is that digital banking cannot automatically replace physical banking for everybody. There are still people, particularly in underserved communities, who depend on branches for basic banking services, account-related issues and transactions that they may not be able to complete digitally,” he added.

Moji said the issue was particularly important to Nigeria’s financial-inclusion efforts, arguing that branch closures should be accompanied by stronger alternative channels capable of serving customers who might otherwise be left behind.

“If a branch is closed in a community, there must be a reliable alternative. It could be a strong agent network, accessible digital banking infrastructure or another formal financial service point,” he said.

A business owner, Grace Ene, who operates a POS business in Lugbe, said the growing adoption of digital payments, POS services, banking applications and transfers had changed the way people conducted financial transactions.

According to her, the reduced foot traffic at bank branches was understandable as more customers now carried out routine transactions electronically.

“Financial transactions are digital. I can’t remember the last time I went to a bank. Most things are done online, so some branches are no longer relevant,” Ene said.

She added that the convenience of transfers, mobile applications and other electronic payment channels had made it possible for many customers to conduct transactions without visiting a bank.