Nigerian Banks Risk Losing Out as KPMG Pushes for Blockchain....

Samuel Mobolaji

KPMG has urged Nigerian financial institutions to embrace blockchain technology and establish partnerships with cryptocurrency firms, warning that failure to do so could leave them behind in the rapidly evolving global financial landscape.

In its March 2025 report, Crypto Risk and Opportunities in Nigeria: A New Banking Paradigm, KPMG highlighted the growing dominance of digital finance and the need for Nigerian banks to shift from caution to proactive engagement with blockchain-powered solutions.

The report examined the impact of the Central Bank of Nigeria’s (CBN) 2021 ban on crypto transactions, revealing that the restriction did little to curb cryptocurrency use. Instead, Nigeria’s share of global crypto inflows surged, with Sub-Saharan Africa recording $125 billion in on-chain crypto transactions between July 2023 and June 2024—Nigeria alone accounted for $59 billion of this volume.

High remittance costs in the traditional banking system have driven Nigerians, including those in the diaspora, toward cryptocurrencies for faster and cheaper cross-border transactions. The sector’s resilience was evident in a 25 per cent rebound in Nigeria’s crypto inflows in 2024, despite regulatory challenges and economic headwinds.

While acknowledging the risks of fraud and illicit financial activities linked to crypto transactions, KPMG emphasised the importance of blockchain analytics in mitigating these threats. The firm urged banks to integrate blockchain-based compliance measures to improve security, detect illicit transactions, and streamline operations.

Regulatory attitudes in Nigeria are also shifting, with the CBN’s Virtual Asset Service Providers (VASPs) guidelines and the Securities and Exchange Commission’s (SEC) Accelerated Regulatory Incubation Program (ARIP) signalling a move towards structured oversight rather than outright restrictions.

KPMG stressed that forward-thinking banks must leverage blockchain to enhance competitiveness and remain relevant in an increasingly digital financial ecosystem. “Banks that fail to innovate risk losing out to global financial players and fintech disruptors,” the report warned.

Meanwhile, concerns over crypto-related fraud persist. The 2025 Chainalysis Crypto Crime Report revealed that illicit crypto transactions amounted to $178 billion over the past five years, with scams generating $10 billion in 2024 alone. The Economic and Financial Crimes Commission (EFCC) has also warned of foreign nationals training young Nigerians in sophisticated cryptocurrency fraud schemes.

Despite these challenges, KPMG maintains that blockchain technology presents a game-changing opportunity for Nigerian banks, not only in compliance but also in unlocking new financial services that align with the future of digital banking.