An Assessment of the Level of Adoption of Financial Technology (Fintech) by Nigerian Banks

Abstract

The emergence of Financial Technology (Fintech) has brought to the forefront the importance of technology in the delivery of banking services. Banking services are now being driven by innovative business models and technology causing creative destruction in the financial system. This study assessed the level of adoption of Fintech by Nigerian commercial banks. Using qualitative analysis, the results revealed that the extent of adoption of Fintech by majority of the banks sampled is at a medium level, and the common Fintech innovation adopted among the banks are money transfer and payment. In addition to this, spearman correlation analysis showed that Fintech innovation has a positive relationship with in-house R&D activities (IRD), collaboration with external companies (CEC), hardware technology acquisition (HTA) and software technology acquisition (STA). Multiple regression analysis showed that Fintech innovation adoption and software technology acquisition have a positive and significant impact on the banks’ financial performance. Few of the challenges of Fintech adoption by the banks are poor understanding/acceptance and distrust of Fintech innovation by customers, difficulty in finding reliable cooperation partners for Fintech innovation, lack of adequate information on Fintech and regulatory challenges. This study suggests that appropriate investment in R&D and software technologies, finding collaborative Fintech partners by the banks, providing a better regulatory environment by government regulators and creating awareness about Fintech to sensitize customers should be given utmost attention in order to achieve a robust service delivery banking system which could foster wealth creation and overall sustainable economic growth.