Nigerian customers can move money through a fintech app in seconds, but the technology behind many of those transactions may rest on servers thousands of kilometres away. From balance checks to transfer confirmations, financial institutions generate and process large volumes of data every day — and where that information is stored has become a central concern for the Central Bank of Nigeria (CBN).

In a June 15, 2026 directive reported by The Punch, the CBN ordered banks, payment service providers, mobile money operators, switching companies and other participants in Nigeria's payments ecosystem to store and manage payment transaction data generated in the country locally. The requirement takes effect on January 1, 2027.

The directive forms part of a broader effort to strengthen control over Nigeria's financial infrastructure, improve regulatory oversight and reduce dependence on systems hosted abroad. But with the deadline approaching, a survey by the National Information Technology Development Agency (NITDA), also reported by BusinessDay, suggests the industry has a long way to go.

Only 26 of the 44 financial institutions that answered the survey's readiness question had either completed the required work or expected to finish before the deadline — about 59 percent. Fifteen said they were unlikely or very unlikely to finish on time, while three could not assess their readiness. More striking still, 22 institutions have not begun at all. The findings expose a costly gap between the CBN's expectations and the industry's ability to meet them. The sequencing is unforgiving: an institution must scope its systems, secure funding, contract a local provider and then migrate — and the survey shows most respondents have cleared only the first of those steps.

A clear deadline, an unfinished transition

Data localisation means keeping certain information within the country where it was generated. The CBN wants payment transaction data created in Nigeria to be stored and managed locally. When a customer moves ₦20,000 from a fintech wallet to a bank, for instance, the transaction creates a digital record containing the details needed to process and verify the payment. The regulator's goal is to keep such data within Nigeria's jurisdiction rather than on foreign-managed infrastructure.

This does not mean foreign technology companies cannot work with Nigerian financial institutions. Those relying on overseas cloud services, however, will need to reconsider where they store and manage payment data.

Nor is the transition as simple as moving files. Institutions must evaluate their current systems, determine which data is affected, find local hosting solutions, migrate their records and keep everything running smoothly during the switch.

The obstacles are significant. According to the NITDA survey, earlier reported by Technext, 70 percent of respondents had identified the data and systems affected by the requirement, but only 52 percent had assessed their current hosting setups. Just 25 percent had secured executive approvals and budgets, 23 percent had found local providers, and 18 percent had begun migration.

The challenge is not comprehension. Many institutions know what the directive requires; what remains is finalising funding, partnerships and technical arrangements. The shift is especially hard for fintechs that depend heavily on international cloud providers such as Amazon Web Services and Microsoft Azure, which supply computing power and storage without requiring companies to operate their own data centres. Some of these firms also benefit from existing contracts and discounts that help reduce costs.

Moving workloads may involve renegotiating contracts, covering migration and data-transfer costs, redesigning systems and acquiring new technical skills. Large banks may absorb these expenses more easily; for smaller fintechs, the cost can be a serious financial strain.

The urgency is evident. In September, banking and technology leaders asked for more time and clearer guidelines, warning that migrating complex systems within six months could prove difficult. Blessing Ehize, chief technology officer of FCMB, also voiced concern over the lack of clarity on which data must be hosted locally and how hybrid-cloud setups would work.

Nigeria has infrastructure, but can it handle the transition?

The CBN's deadline also presents an opportunity for Nigeria's data-centre and cloud-computing sector. Instead of relying on foreign providers to host essential information, financial institutions can invest more in local infrastructure, benefiting domestic data-centre operators and cloud companies.

NITDA Director-General Kashifu Inuwa has said Nigerian businesses spend more than $850 million a year on cloud services. Keeping more of that spending in the country could spur local investment, job creation and stronger digital infrastructure.

Local providers appear to be gearing up for increased demand. In an interview, UniCloud Africa CEO Krishnan Ranganath estimated that the migration could require between 14 and 30 megawatts of data-centre capacity. He noted that existing facilities have around 20MW available, with another 15MW to 20MW that could be expanded.

Not everyone is optimistic. Nugi Technologies founder Ugi Augustine has expressed concern that Nigerian data centres may struggle to meet the volume and reliability needs of financial institutions, citing capacity and technical expertise as significant issues. Between those projections and those concerns sits the question that will shape the transition: whether local capacity can scale in time to meet demand without compromising the reliability payment systems require.

For a fintech, moving payment records to a local server is not enough on its own. If that server fails during peak periods, customers may face failed transactions, delays or service interruptions. A poorly planned migration can create the very problems the policy is meant to avoid.

There is also the question of how the rules apply to systems that mix local and foreign infrastructure. Some organisations may keep certain applications on international platforms while storing regulated payment data locally — a split-cloud arrangement. But if applications abroad must communicate continually with local databases, the setup can introduce delays and complicate operations. How the CBN treats such hybrid arrangements — one of the specific uncertainties Ehize raised — will influence architecture decisions across the sector.

Regulator holds the line on January 1, 2027

The CBN has stressed that January 1, 2027 remains the compliance deadline. At a recent meeting, it emphasised that institutions must consider the entire lifecycle of payment data — creation, processing, storage and disposal — and warned that localising data alone will not ensure security. Businesses must also focus on cybersecurity, disaster recovery and continuity plans.

For Nigeria, the goal is clear: strengthen domestic infrastructure and gain greater control over financial data. Success, however, will not depend on how many servers are set up or how many companies sign local contracts. It will be judged by whether financial institutions can transition smoothly without imposing high costs on customers or weakening the reliability of digital payments.

The most telling signals in the months ahead will be concrete: whether the CBN clarifies which data classes must stay in-country and how hybrid-cloud setups will be treated; whether the 22 institutions yet to begin implementation secure budgets and local provider contracts; and what NITDA's follow-up readiness surveys show as the deadline approaches.

If smaller fintechs struggle while larger ones move ahead, the divide between those able to thrive in Nigeria's financial system and those that cannot could deepen. The CBN to keep payment data in Nigeria — ensuring the industry can afford the transition may be just as crucial.