Effect of Financial technology on the Performance of Deposit Money Banks in Nigeria: An Autoregressive Distributed Lag (ARDL) Approach

Abstract

This study examines the effect of financial technology (FinTech) on the performance of Deposit Money Banks (DMBs) in Nigeria over the period 2012Q1–2023Q4. Quarterly industry-level data from 2012 to 2023 were sourced from the Central Bank of Nigeria (CBN), Nigeria Inter-Bank Settlement System (NIBSS), and the Nigerian Deposit Insurance Corporation (NDIC) and analysed using the Autoregressive Distributed Lag (ARDL) model. The results showed that POS and internet banking transactions exert significant negative effects on performance in both the short and long run, while mobile banking and ATM transactions have insignificant effects on performance. The study concludes that FinTech adoption in Nigeria has yet to deliver consistent performance gains, with some channels undermining rather than enhancing bank outcomes. It recommends that banks and regulators strengthen their fintech channels and promote interoperability and consumer protection to ensure that digital transformation translates into sustainable improvements in banking performance.

Keywords:       Financial Technology, Bank Performance, CAMELS Framework, Autoregressive Distributed Lag (ARDL) Model, Deposit Money Banks, Nigeria, Performance Index, Digital Banking.