IMPACT OF FINANCIAL TECHNOLOGY (FINTECH) INVESTMENT ON FINANCIAL PERFORMANCE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

The rapid integration of financial technology (fintech) into banking operations has transformed the global financial services landscape. Yet, the specific impact of fintech investments on the financial performance of Nigerian banks remains underexplored. This study examines how two categories of fintech investment, operational expenditure (FintechOpex) and capital expenditure (FintechCapex) affect Net Interest Margin (NIM) and Return on Assets (ROA) across twelve Nigerian commercial banks over the period 2014-2023. Using panel data techniques, we estimate Pooled Ordinary Least Squares (POLS), Fixed Effects (FEM), and Random Effects (REM) models, and apply the Breusch Pagan test for heteroskedasticity and the Hausman test for model choice. The Fixed Effects specification emerges as the most reliable. The findings of the study show that FintechOpex has no statistically significant impact on either NIM or ROA, suggesting that short-term fintech spending does not immediately boost bank performance. In contrast, FintechCapex exerts a significant, positive influence on both performance measures, indicating that longer-term fintech investments drive tangible financial gains. The results of the study further revealed that higher liquidity correlates positively with both NIM and ROA. By distinguishing between FintechOpex and FintechCapex, this study refines the theoretical framework for evaluating fintech investments in banking. The results of the study show the importance of prioritizing capitalized fintech projects, restructuring operational budgets, integrating predictive analytics in lending, and leveraging digital tools for liquidity management.