Exploring the influence of financial technology on banking services in Nigeria

https://doi.org/10.35912/ijfam.v5i3.1513
Published: Dec 18, 2023

Abstract:

Purpose: This study explored the impact of fintech on Nigerian banking services.

Research methodology: This study employed a quantitative research approach, analyzing data from the financial statements of selected Nigerian banks, and financial technology application statistics through econometric modelling and descriptive analysis.

Results: The study found that Fintech positively impacts Nigerian banks' traditional and market-based performance measures. For example, statistically, a 1 per cent increase in ATM transactions could increase banks' earnings per share by up to N4 on average. This implies that fintech adoption in the Nigerian financial system can increase efficiency, reduce costs, improve the customer experience, and enhance financial inclusion.

Limitations: This study had several limitations, such as the unavailability of data for some banks and the limited timeframe due to data unavailability.

Contribution: This study contributes to the growing body of literature on fintech in emerging markets by providing insights into Nigeria’s evolving fintech landscape and its potential impact on traditional banking services.

Novelty: This study is one of the first to investigate the impact of fintech on Nigerian banking services based on selected case studies and the quantitative research approach employed. This study provides valuable insights for policymakers, regulators, and industry practitioners seeking to promote a conducive environment for fintech growth in Nigeria’s banking sector.

Keywords:
1. Financial technology
2. banking services
3. Automated Teller Machine
4. Point of Sales
5. Online Payment Transactions
Authors:
1 . Adewumi Otonne
Lagos Business School, Pan Atlantic University, Nigeria
2 . Olaoluwa Tosin Ige
Research Department, Proshare Nigeria, Lagos, Nigeria
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How to Cite
Otonne, A., & Ige, O. T. (2023). Exploring the influence of financial technology on banking services in Nigeria. International Journal of Financial, Accounting, and Management, 5(3), 323–341. https://doi.org/10.35912/ijfam.v5i3.1513
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Issue & Section
Vol. 5 No. 3 (2023): December
Articles
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This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

References

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    Anoke, A. F., Okafor, N. J., & Onu, A. N. (2023). Strategic outsourcing and corporate performance of quoted insurance firms in Nigeria. International Journal of Financial, Accounting, and Management, 5(1), 19-33.

    Atoyebi, O. M. (2022). Overview of the Nigerian Fintech Market. Retrieved from https://omaplex.com.ng/overview-of-the-nigerian-fintech-market/

    Bates, R. (2017). Banking on the future: an exploration of fintech and the consumer interest. A Report for Consumers International.

    Begenau, J., Farboodi, M., & Veldkamp, L. (2018). Big data in finance and the growth of large firms. Journal of Monetary Economics, 97, 71-87.

    Bijker, W. E. (2008). Technology, social construction of. The international encyclopedia of communication.

    Boot, A., Hoffmann, P., Laeven, L., & Ratnovski, L. (2021). Fintech: what’s old, what’s new? Journal of Financial Stability, 53, 100836.

    Bray, S. (2014). Power in Transit: Examining the Social Construction of Power in Relation to the Perceptions, Interactions, and Spatial Behavior of Passengers on Public Buses.

    CBN. (n.d.). Financial Inclusion. Retrieved from https://www.cbn.gov.ng/fininc/

    Cheng, M., & Qu, Y. (2020). Does bank FinTech reduce credit risk? Evidence from China. Pacific-Basin Finance Journal, 63, 101398.

    Chinyamunjiko, N., Makudza, F., & Mandongwe, L. (2022). The nexus between blockchain distributed ledger technology and financial crimes. International Journal of Financial, Accounting, and Management, 4(1), 17-30.

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    Lee, I., & Shin, Y. J. (2018). Fintech: Ecosystem, business models, investment decisions, and challenges. Business horizons, 61(1), 35-46.

    Leong, C., Tan, B., Xiao, X., Tan, F. T. C., & Sun, Y. (2017). Nurturing a FinTech ecosystem: The case of a youth microloan startup in China. International Journal of Information Management, 37(2), 92-97.

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    Pejkovska, M. (2018). Potential negative effects of Fintech on the financial services sector. Examples from the European Union, India and the United States of America.

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    Pinch, T. J., & Bijker, W. E. (1984). The social construction of facts and artefacts: Or how the sociology of science and the sociology of technology might benefit each other. Social studies of science, 14(3), 399-441.

    Popoola, M., Ebiseni, I., Asuk, N., Dosunmu, A., Borokinni, A., Agunbiade, A., & Fubara, N. (2023). Nigeria: Fintech Review 2022 – Recent Regulatory And Legal Developments In Nigeria.

    Rahmawati, Y., & Hadian, H. N. (2022). The influence of debt equity ratio (DER), earning per share (EPS), and price earning ratio (PER) on stock price. International Journal of Financial, Accounting, and Management, 3(4), 289-300.

    Saksonova, S., & Kuzmina-Merlino, I. (2017). Fintech as financial innovation–The possibilities and problems of implementation.

    Tharu, N. K., & Shrestha, Y. M. (2019). The influence of bank size on profitability: an application of statistics. International Journal of Financial, Accounting, and Management, 1(2), 81-89.

    Tosin, I. O., & Otonne, A. (2019). A comparative analysis of the determinants of profitability of commercial and microfinance banks in Nigeria. International Journal of Financial, Accounting, and Management, 1(3), 173-182.

    Truong, T. (2016). How FinTech industry is changing the world.

    Tushman, M. L., & Anderson, P. (1986). Technological Discontinuities and Organizational Environments. Administrative science quarterly, 31(3), 439-465.

    Zhao, Y., Goodell, J. W., Wang, Y., & Abedin, M. Z. (2023). Fintech, macroprudential policies and bank risk: Evidence from China. International Review of Financial Analysis, 87, 102648.

  1. Adepetun, A. (2017). FinTech to distrupt retail banking by 92% in Nigeria. Retrieved from https://guardian.ng/business-services/fintech-to-distrupt-retail-banking-by-92-in-nigeria/
  2. Anoke, A. F., Okafor, N. J., & Onu, A. N. (2023). Strategic outsourcing and corporate performance of quoted insurance firms in Nigeria. International Journal of Financial, Accounting, and Management, 5(1), 19-33.
  3. Atoyebi, O. M. (2022). Overview of the Nigerian Fintech Market. Retrieved from https://omaplex.com.ng/overview-of-the-nigerian-fintech-market/
  4. Bates, R. (2017). Banking on the future: an exploration of fintech and the consumer interest. A Report for Consumers International.
  5. Begenau, J., Farboodi, M., & Veldkamp, L. (2018). Big data in finance and the growth of large firms. Journal of Monetary Economics, 97, 71-87.
  6. Bijker, W. E. (2008). Technology, social construction of. The international encyclopedia of communication.
  7. Boot, A., Hoffmann, P., Laeven, L., & Ratnovski, L. (2021). Fintech: what’s old, what’s new? Journal of Financial Stability, 53, 100836.
  8. Bray, S. (2014). Power in Transit: Examining the Social Construction of Power in Relation to the Perceptions, Interactions, and Spatial Behavior of Passengers on Public Buses.
  9. CBN. (n.d.). Financial Inclusion. Retrieved from https://www.cbn.gov.ng/fininc/
  10. Cheng, M., & Qu, Y. (2020). Does bank FinTech reduce credit risk? Evidence from China. Pacific-Basin Finance Journal, 63, 101398.
  11. Chinyamunjiko, N., Makudza, F., & Mandongwe, L. (2022). The nexus between blockchain distributed ledger technology and financial crimes. International Journal of Financial, Accounting, and Management, 4(1), 17-30.
  12. Gibson, J. (2015). The impact FinTech is having on the financial services industry in Ireland. Dublin Business School.
  13. Guo, P., & Zhang, C. (2023). The impact of bank FinTech on liquidity creation: Evidence from China. Research in International Business and Finance, 64, 101858.
  14. Ironsi, T. (2023). 2022 in African fintech: Exploring the biggest African fintech stories that shaped the year. Retrieved from https://paystack.com/blog/operations/african-fintech-review-2022
  15. Itah, A. J., & Emmanuel, E. E. (2014). Impact of cashless banking on banks’ profitability (Evidence from Nigeria). Asian Journal of Finance & Accounting, 6(2), 362-376.
  16. Kerényi, Á., & Molnár, J. (2017). The impact of the fintech phenomenon–radical change occurs in the financial sector? Financial and Economic Review, 16(3), 32-50.
  17. Kim, Y., Park, Y.-J., Choi, J., & Yeon, J. (2015). An empirical study on the adoption of “Fintech” service: Focused on mobile payment services. Advanced Science and Technology Letters, 114(26), 136-140.
  18. Klein, H. K., & Kleinman, D. L. (2002). The social construction of technology: Structural considerations. Science, Technology, & Human Values, 27(1), 28-52.
  19. Kolesova, I., & Girzheva, Y. (2018). Impact of financial technologies on the banking sector. KnE Social Sciences, 215-220.
  20. KPMG. (2017). The Pulse of Fintech Q4 2016. Retrieved from https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2017/02/pulse-of-fintech-q4-2016.pdf
  21. Lee, I., & Shin, Y. J. (2018). Fintech: Ecosystem, business models, investment decisions, and challenges. Business horizons, 61(1), 35-46.
  22. Leong, C., Tan, B., Xiao, X., Tan, F. T. C., & Sun, Y. (2017). Nurturing a FinTech ecosystem: The case of a youth microloan startup in China. International Journal of Information Management, 37(2), 92-97.
  23. Mlanga, S. (2019). Implications of Financial Technology for Professionals in Financial Services in Nigeria. International Research Journal of Finance and Economics, ISSN, 1450, 2887.
  24. Mustapha, S. A. (2018). E-Payment technology effect on bank performance in emerging economies–evidence from Nigeria. Journal of Open Innovation: Technology, Market, and Complexity, 4(4), 43.
  25. Olayinka, A. A. (2022). Financial statement analysis as a tool for investment decisions and assessment of companies’ performance. International Journal of Financial, Accounting, and Management, 4(1), 49-66.
  26. Otonne, A., Melikam, W., & Ige, O. T. (2023). Adoption of Financial Technology and performance of Deposit Money Banks in Nigeria.
  27. Ovia, J. (2001). Internet Banking: practices and potentials in Nigeria. Paper presented at the A paper at the conference organized by the Institute of Chartered Accountants of Nigeria (ICAN), Lagos, September.
  28. Pejkovska, M. (2018). Potential negative effects of Fintech on the financial services sector. Examples from the European Union, India and the United States of America.
  29. Petty, R. E., & Cacioppo, J. T. (1986). Communication and persuasion: Central and peripheral routes to attitude change: Springer Science & Business Media.
  30. Pinch, T. J., & Bijker, W. E. (1984). The social construction of facts and artefacts: Or how the sociology of science and the sociology of technology might benefit each other. Social studies of science, 14(3), 399-441.
  31. Popoola, M., Ebiseni, I., Asuk, N., Dosunmu, A., Borokinni, A., Agunbiade, A., & Fubara, N. (2023). Nigeria: Fintech Review 2022 – Recent Regulatory And Legal Developments In Nigeria.
  32. Rahmawati, Y., & Hadian, H. N. (2022). The influence of debt equity ratio (DER), earning per share (EPS), and price earning ratio (PER) on stock price. International Journal of Financial, Accounting, and Management, 3(4), 289-300.
  33. Saksonova, S., & Kuzmina-Merlino, I. (2017). Fintech as financial innovation–The possibilities and problems of implementation.
  34. Tharu, N. K., & Shrestha, Y. M. (2019). The influence of bank size on profitability: an application of statistics. International Journal of Financial, Accounting, and Management, 1(2), 81-89.
  35. Tosin, I. O., & Otonne, A. (2019). A comparative analysis of the determinants of profitability of commercial and microfinance banks in Nigeria. International Journal of Financial, Accounting, and Management, 1(3), 173-182.
  36. Truong, T. (2016). How FinTech industry is changing the world.
  37. Tushman, M. L., & Anderson, P. (1986). Technological Discontinuities and Organizational Environments. Administrative science quarterly, 31(3), 439-465.
  38. Zhao, Y., Goodell, J. W., Wang, Y., & Abedin, M. Z. (2023). Fintech, macroprudential policies and bank risk: Evidence from China. International Review of Financial Analysis, 87, 102648.