ISSN 2308-8559 e-ISSN 2415-8224

https://doi.org/10.62763/ef/4.2025.48

Volume 15, No. 4, 2025

48-57

  • Read article

    • Financial technology and the performance of deposit money banks in Nigeria

    Biliqees Ayoola Abdulmumin Jamiu Olaniyi Omotosho

    Received 05.06.2025, Revised 12.09.2025, Accepted 16.10.2025

    Abstract

    This research aimed to explore how the adoption of financial technology has influenced the performance of Nigerian Deposit Money Banks. Quarterly time series data from 2014 to 2023 were analysed using the Autoregressive Distributed Lag model. The FinTech channels assessed included Point of Sale terminals, Automated Teller Machines, mobile banking, and internet banking. The long-run results revealed that mobile banking (coefficient = 9.5212, p = 0.0314) and internet banking (coefficient = 11.8512, p = 0.0365) significantly enhanced the Net Interest Margin, indicating that the adoption of these digital platforms improved banks’ ability to generate interest income from lending activities. In contrast, Point of Sale transactions (coefficient = −37.0647, p = 0.0114) and Automated Teller Machines transactions (coefficient = −30.1525, p = 0.1153) negatively impacted the Net Interest Margin, suggesting that reliance on traditional payment infrastructure reduced banks’ interest-based profitability. Inflation (coefficient = 1.7993, p = 0.0154) had a significant positive effect on the Net Interest Margin, implying that higher inflation raised lending rates, thereby benefiting banks’ interest margins. For Return on Equity FinTech channels exhibited weak and statistically insignificant effects, suggesting that factors such as capital structure, shareholder equity, and non-interest income played a more dominant role in determining profitability than digital banking technologies. The short-run analysis showed that Automated Teller Machine transactions had a marginally negative effect on the Net Interest Margin (coefficient = −12.2540, p = 0.0579), while mobile banking, Point of Sale, and inflation did not show significant effects on either Return on Equity or Net Interest Margin in the short term. The study recommended that banks increase investment in mobile and internet banking platforms, while reassessing the cost-effectiveness of Point of Sale and Automated Teller Machines infrastructure. This research offered valuable insights for banks and policymakers, underscoring the need to prioritise digital banking innovations to enhance profitability and overall financial performance in Nigeria

    Keywords:

    FinTech adoption; Net Interest Margin; Return on Equity; banking performance; mobile banking

    Suggested citation
    Abdulmumin, B.A., & Omotosho, J.O. (2025). Financial technology and the performance of deposit money banks in Nigeria. Economic Forum, 15(4), 48-57. https://doi.org/10.62763/ef/4.2025.48
    224 Views

    References

    1. Abad-Segura, E., González-Zamar, M.-D., López-Meneses, E., & Vázquez-Cano, E. (2020). Financial technology: Review of trends, approaches, and management. Mathematics, 8(6), article number 951. doi: 10.3390/math8060951.
    2. Akani, H.W., & Obiosa, R.L.T. (2020). Effects of financial innovations on the profitability of deposit money banks in Nigeria. European Journal of Accounting, Auditing and Finance Research, 8(1), 52-73. doi: 10.37745/ejaafr/vol8.no1.pp52-73.2020.
    3. Ali, J.I., Jatau, S., & Ashami, P.I. (2016). Deposit money banks’ credit and investment drive of developing economies: Empirical evidence from Nigeria. Asian Journal of Agriculture Extension, Economics & Sociology, 11(1), 1-12. doi: 10.9734/AJAEES/2016/25134.
    4. Ashiru, O., Balogun, G., & Paseda, O. (2023). Financial innovation and bank financial performance: Evidence from Nigerian deposit money banks. Research in Globalization, 6, article number 100120. doi: 10.1016/j.resglo.2023.100120.
    5. Awendo, N.O., & Mwanzia, S. (2022). Effect of alternative banking channels on financial performance of commercial banks in Kenya. The Strategic Journal of Business & Change Management, 9(4), 403-418. doi: 10.61426/sjbcm.v9i4.2421.
    6. Barbu, C.M., Florea, D.L., Dabija, D.-C., & Barbu, M.C.R. (2021). Customer experience in FinTech. Journal of Theoretical and Applied Electronic Commerce Research, 16(5), 1415-1433. doi: 10.3390/jtaer16050079.
    7. Central Bank of Nigeria. (n.d.a). Retrieved from https://www.cbn.gov.ng/.
    8. Central Bank of Nigeria. (n.d.b). e-Payment statistics. Retrieved from https://www.cbn.gov.ng/PaymentsSystem/ePaymentStatistics.html. 
    9. Central Bank of Nigeria. (n.d.c). List of deposit money banks as at April 26, 2024. Retrieved from https://www.cbn.gov.ng/Out/2024/CCD/LIST%20OF%20DEPOSIT%20MONEY%20BANKS%20AS%20AT%2026TH%20APRIL,%202024%20%281%29.pdf.
    10. Chukwu, K.O., & Molokwu, S.R. (2022). Effects of digital banking on the performance of commercial banks in Nigeria 2010-2019. International Journal of Multidisciplinary Research and Analysis, 5(1), 133-148. doi: 10.47191/ijmra/v5-i1-18.
    11. Claessens, S., Frost, J., Turner, G., & Zhu, F. (2018). Fintech credit markets around the world: Size, drivers and policy issues. BIS Quarterly Review, 29-49.
    12. Gbanador, M.A. (2023). Electronic banking systems and the performance of deposit money banks in Nigeria. Nigerian Journal of Management Sciences, 24(1a), 360-371.
    13. Ighoroje, E.J., & Okoroyibo, E.E. (2020). Cashless policy and the performance of deposit money banks in Nigeria. European Journal of Accounting, Auditing and Finance Research, 8(5), 85-104.
    14. Ilo, B.M., Soyebo, Y.A., & Olaiya, I.K. (2024). Emerging technology adoption and financial performance of deposit money banks in Nigeria. Iranian Economic Review, 28(2), 607-617. doi: 10.22059/ier.2024.338289.1007379.
    15. Islam, M.S.N., Yusuf, A.A., & Shuaibu, H. (2022). The impact of financial technology (FinTech) on financial service delivery of deposit money banks in Nigeria. Sapientia Foundation Journal of Education, Sciences & Gender Studies, 4(2), 83-93.
    16. Johnson, S., & Kwak, J. (2012). Is financial innovation good for the economy? Innovation Policy and the Economy, 12(1), 1-16. doi: 10.1086/663153.
    17. Kagan, J. (2025). Financial technology (FinTech): Its uses and impact on our lives. Cornell University. Retrieved from https://career.cornell.edu/blog/2025/10/31/financial-technology-fintech-its-uses-and-impact-on-our-lives/.
    18. Krylovskyi, V. (2024). Increasing the financial potential of investment activity of business entities. Economics, Entrepreneurship, Management, 11(2), 65-76. doi: 10.56318/eem2024.02.065.
    19. Lerner, J. (2006). The new new financial thing: The origins of financial innovations. Journal of Financial Economics, 79(2), 223-255. doi: 10.1016/j.jfineco.2005.01.004.
    20. Madugba, J.U., Egbide, B.-C., Jossy, D.W., Agburuga, U.T., & Chibunna, O.O. (2021). Effect of electronic banking on financial performance of deposit money banks in Nigeria. Banks and Bank Systems, 16(3), 71-83. doi: 10.21511/bbs.16(3).2021.07.
    21. Nangin, M.A., Barus, I.R.G., & Wahyoedi, S. (2020). The effects of perceived ease of use, security, and promotion on trust and its implications on FinTech adoption. Journal of Consumer Sciences, 5(2), 124-138. doi: 10.29244/jcs.5.2.124-138.
    22. Nasserinia, A., Ariff, M., & Fan-Fah, C. (2014). Key determinants of Japanese commercial banks performance. Pertanika Journal of Social Science and Humanities, 22, 17-38.
    23. Nigeria Deposit Insurance Corporation. (n.d.). Year 2023 annual report. Retrieved from https://ndic.gov.ng/year-2023-annual-report/.
    24. Nigerian Inter-Bank Settlement System. (n.d.). Nigeria recorded N600 trillion e-payment transactions in 2023. Retrieved from https://nibss-plc.com.ng/nigeria-recorded-n600-trillion-e-payment-transactions-in-2023.
    25. Nurlaela, N., Luthfiyana, M., Sulastri, A., & Wahyunita, E.S. (2020). Reviewing the fatwas related to FinTech applications in Islamic financial institutions in Indonesia. Share: Journal of Islamic Economics and Finance, 9(2), 206-226. doi: 10.22373/share.v9i2.7989.
    26. Okoro, C.C., Nnam, H.I., Etukudo, J.W., & Obizuo, C.J. (2024). Impact of financial technology on financial institutions’ performance. Evidence from Nigerian commercial banks. Journal of Accounting and Financial Management, 10(3), 111-134. doi: 10.56201/jafm.v10.no3.2024.pg111.134.
    27. Osakwe, C.I., & Ezeaku, C.N. (2022). The effect of electronic banking on the operations of deposit money banks in Nigeria (2006-2020). International Journal of Trend in Scientific Research and Development, 6(4), 1233-1241.
    28. Philippon, T. (2016). The FinTech opportunity. National Bureau of Economic Research. Working Paper No. 22476. doi: 10.3386/w22476.
    29. Silber, W.L. (1983). The process of financial innovation. The American Economic Review, 73(2), 89-95.
    30. Suseendran, G., Chandrasekaran, E., Akila, D., & Sasi Kumar, A. (2019). Banking and FinTech (financial technology) embraced with IoT device. In N. Sharma, A. Chakrabarti & V. Balas (Eds.), Data management, analytics and innovation (Vol. 1042, pp. 197-211). Singapore: Springer. doi: 10.1007/978-981-32-9949-8_15.  
    31. Umar, M., Maijama’a, D., & Adamu, M. (2014). Conceptual exposition of the effect of inflation on bank performance. Journal of World Economic Research, 3(5), 55-59. doi: 10.11648/j.jwer.20140305.11.
    32. Zaghlol, A.K., Ramdhan, N.A., & Othman, N. (2021). The nexus between FinTech adoption and financial development in Malaysia: An overview. Global Business and Management Research: An International Journal, 13(4), 365-375.
    en