Effect of Financial Technology on the Financial Performance of Commercial Banks in Nigeria

Abstract

The study examined the effect of financial technology on the financial performance of commercial banks in Nigeria from 2009 to 2024. Specifically, it aimed to: assess the effect of Point of Sale (POS) transactions on financial performance; investigate the extent to which mobile banking influences financial performance; determine the effect of internet banking on financial performance; and evaluate the impact of Automated Teller Machines (ATMs) on the financial performance of commercial banks in Nigeria. An ex-post facto research design was adopted for the study. The population comprised twenty-six commercial banks operating in Nigeria, out of which five banks were purposively selected as the sample. Data were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin (2024) and the annual reports of the sampled banks. The data were analyzed using descriptive statistics, correlation analysis, and the Hausman test. The findings from the descriptive statistics revealed that all variables were normally distributed, while the correlation analysis indicated no multicollinearity among the study variables. Results from the estimation technique showed that mobile banking, internet banking, automated teller machines, and point of sale transactions all had significant positive effects on the financial performance of commercial banks in Nigeria. The study concluded that financial technology significantly enhances the financial performance of commercial banks in Nigeria. It recommended, among others, that commercial banks should increase their investment in internet and mobile banking infrastructure and provide incentives to encourage customer adoption of these channels. This would help to boost revenue, reduce operational costs, and ultimately improve profitability.