Artificial Intelligence (AI) is fast becoming the defining force of international finance, influencing how banks communicate with customers, manage risks, and develop operational efficiencies.
In Nigeria – the country’s banking sector is extremely competitive and central to Africa’s largest economy, UBA has moved to the forefront of its peers in adopting AI strategies to innovate the bank’s customer experience. The future of banking in Nigeria will be won by those who can embrace emerging technologies for success, which is why competitors are doing everything possible to keep up with this change and look to be the first to adopt AI.
How UBA has Taken Strategic Lead in AI
UBA finds its lead through its early, aggressive, and highly visible adoption of AI in its customer-facing products, and internal operations. The bank’s flagship AI chatbot – Leo – launched in 2018, has grown into one of the most popular AI-based banking assistants in Africa, with over 5 million active users. UBA has altered banking engagement into routine transactions and customers can transfer funds, pay bills, check balances, and access personalized services from channels like WhatsApp, Facebook Messenger, and Apple Business Chat.
For Leo, the convenience the service provides is a clear benefit. Leo signifies that UBA is committed to implementing AI as an integrated, center point of customer engagement. UBA leadership consistently communicated that AI and advanced analytics were not “additions” to the bank, but rather top priority strategies. UBA directly tied its technology investment to its corporate growth strategy and designed an ecosystem based on AI enabling operational efficiencies, extending reach, and building loyalty with an increasingly digital customer base.
The bank has invested in AI-driven security and fraud detection services to snuff out cybercriminals. UBA deployed and utilizes advanced monitoring and reporting platforms 24/7 with machine learning models to analyze variables in a transaction to identify suspicious patterns before each transaction is finalized. This has become particularly crucial in Nigeria, where cybercrime and electronic fraud are significant risks to financial institutions. Adopting robotic automation in conjunction with AI, UBA has improved operational resilience and regulatory compliance.
The bank has also demonstrated a significant financial commitment. In 2024 alone, UBA invested over ₦48 billion in Information Technology development, twice as much as it invested the previous year. Much of that investment went towards artificial intelligence, digital banking infrastructure, and cybersecurity. To UBA, this level of investment is critical in the understanding that winning the AI race will position UBA to achieve long-term sustainability and leadership in the financial services space in Africa.
Other Banks Race to Catch Up
Other tier-one banks are now starting to take UBA’s dominance seriously, and intensify efforts to develop their own AI-based solutions, albeit with varied levels of success.
The nearest competitor is Access Holdings Plc in terms of AI adoption. Access’s digital lending platform, Oxygen X Finance, utilizes AI-powered credit scoring algorithms to consider real-time loan applications, therefore broadening financial inclusion by enabling Access to lend to people who traditionally needed collateral that was not available to them. Access’s board had made AI & automation governance priorities to the bank and created the objective challenge to UBA for its story around digital transformation.
FirstHoldCo Plc (previously First Bank of Nigeria Holdings) is in position 3. It has incorporated Gen AI applications on its FirstCustomer digital platform to enable personalized experiences and brought banking to the retail consumer. FirstHoldCo has been the only competitor to publicly expect that AI can be detrimental, including algorithmic bias, poor data quality, and issues related to cybersecurity. This highlights FirstHoldCo preference for a gradual approach to innovation rather than full-blown transformation.
Zenith Bank and Guaranty Trust Holding Company (GTCO) appear to be further down the pecking order with regards to AI. Both have made significant statements about their expected ambitions for AI across their businesses but remain in the early phases of this stage of implementation. They have a couple of AI-only-powered chatbots such as Ziva (Zenith) and Gbot (GTCO), but both are nowhere near the scale and functionality of UBA’s Leo. Industry analysts believe that these banks are under pressure to accelerate their AI strategies before they lose out to their traditional rivals, and perhaps their fintech disrupter competitors.
AI’s Widespread Use in the Industry
AI is now widespread across various activities in the banking industry in Nigeria, it is predominantly used in fraud detection. By using machine-learning algorithms, banks can analyze transaction data in real time to identify unusual patterns in transactions, effectively allowing humans to identify fraud opportunities significantly faster. In an industry that loses billions a year to fraud, the frictionless operation of these solutions is important.
AI is also developing in predictive analytics capabilities for banks to understand customer behavior and offer personalized products, able to compare reasoned credit risk before issuing loans. In personalized banking, we can think that a bank can suggest savings plans, spending restrictions based on their profile, investment opportunities. For banks, this is an opportunity to generate new revenue and monetization opportunities gained through customer satisfaction.
The introduction of chatbots and assistive virtual assistants have become a normal operational task for most banks. AI has changed functions for many banks. For example, Fidelity Bank’s Ivy, Access Bank’s Tamada and Zenith Bank’s Ziva demonstrate a market-wide use of banks that are utilizing AI to perform both simple queries and transaction events. This allows for increased call center capacity, operational efficiencies or cost controls, while providing year-round operational function ability.
Barriers to AI Adoption
As we take stock of where AI in banking is today, what remains a challenge to solve? There are two barriers we need to mention with respect to the wider adoption of AI – infrastructure and customer trust. Part of Nigeria remains underdeveloped with respect to having reliable data systems, with the reliable capacity of broadband services, and resource-scalable cloud services. It is difficult to imagine how AI can do what it does, when much of the country’s environment remains underdeveloped; from connectivity to reliable services.
There is also a significant level of regulatory uncertainty. Nigeria’s Central Bank has expressed an interest in formalising the adoption of AI however it, and arguably the banks, have yet to issue meaningful policy on data governance, ethical AI and consumer protection. Without meaningful regulation in place, banks are vulnerable to legal action and reputational risk.
The Fintech Challenge
Then there is the challenge of Nigeria’s fintech sector which is one of the fastest-growing in the world. Fintech startups are typically more nimble and can deploy AI based solutions for payments, lending, and asset management, without the stranglehold of old-fashioned banking infrastructure. Companies such as Flutterwave, Paystack and Carbon are already deploying machine learning for fraud detection and customer engagement use cases.
This all means that traditional banks must further accelerate the adoption of AI, or else grow hopelessly uncompetitive. So, banks are increasingly working in partnerships with fintech companies and AI is regularly the key element of their work together.
Future Scope
The race for AI in Nigerian banking is clearly only beginning. While UBA has significant lead over its peers, their competitors are now investing in order to catch up. Most analysts believe the next phase of the competition will focus on advanced applications of AI for example advanced natural language processing to provide multilingual customer service, generative AI for pure financial advisory services, and developing risk models to use for investment banking using AI as a trusted messenger that consumes all information available.
As these advances begin to take shape they will have implications that will be profound. Customers in the banking ecosystem will experience banking that is more seamless based on their personal profile, they will feel a more secure relationship with financial actors, banks will maximise efficiency, spend less money and offer access to capital on larger scales. From a larger perspective, Nigeria’s banking ecosystem could become more efficient, more transparent, less vulnerable and massively more inclusive.
Ultimately what we have said will only happen if innovation, regulation and trust are managed in balance. Banks will need to invest in more than just the latest AI tool, they will need to invest in customer education, employee training and developing collaborative relationships with regulators in order to ensure its safe and ethical deployment.
Lastly, in this high stakes AI space, UBA’s head start gives it a competitive advantage, though the competition is heating up. The AI revolution in Nigeria’s banking ecosystem is real, and it is revolutionising the way that banks do business.