Cyber Security and Financial Innovation of Selected Deposit Money Banks in Nigeria

Abstract

This paper examined the impact of cybersecurity in driving the financial innovation of Deposit Money Banks in Nigeria. The rapid growth in population coupled with the challenge of reducing the rate of the financially excluded has made the need for financial innovation by Deposit Money Banks in Nigeria a matter of serious importance. However, due to a mix of factors ranging from poor design, design vulnerabilities to lopsided adoption and implementation of new financial technology products, this need has remained largely unmet with attendant negative consequences on the financial system. The study adopted a survey research design with primary data obtained via a structured questionnaire administered to a sample size of fifty-six (56) Deposit Money Banks Staff purposively selected. The sampled staffs were senior member staff of key impacted departments while the Banks selected accounted for 93% of total market capitalization as on December 31, 2021. The primary data collected were analyzed using descriptive and inferential statistics. The study found that cybersecurity proxied by risk management and bank monitoring had a statistically and positively significant impact on financial innovation of deposit money banks in Nigeria (Adj.R²=0.447, F_(2,55)=23.274, p< 0.05). It recommended that deposit money banks should ensure regular review, revision and strengthening of their risk management framework to meet with emerging challenges from the deployment of financial innovative products and services. Additionally, deposit money banks should improve on the level of monitoring of the deployed e-banking channels (Card products, POS, ATMs and other channels) to facilitate greater reliance on them for the consummation of financial transactions.