The Nexus between Cashless Banking Policy and Returns of License Deposit Money Banks (DMBs) in Nigeria: A Comparative Study

Cashless banking has gained significant trend over the years, with the increasing embracement of electronic transaction channels such as Global Pay (GPAY), Corporate Internet Banking (CIB), Mobile Banking (MB), Pay-Direct (PD), and Remita (RMT). This study, therefore, examines the nexus between the cashless banking policy and the performance of Deposit Money Banks (DMBs) in Nigeria. Using mixed method sources of data, the qualitative data was sourced from the employees of licensed DMBs via a closed-ended questionnaire, and secondary data was gathered from the annual reports of the sampled DMBs covering the period from 2012 to 2023. The SEM-PLS models reveal that CIB (p = 0.001), MBS (p = 0.005), and PDS (p = 0.01) are strongly associated with a bank’s financial performance. The panel regression models indicate that the global pay (GPAY), with a p-value of 0.018, proved to be a significant predictor of ROE of the sampled DMBs. Furthermore, the regression results show that the cashless banking has no significant relationship with the ROA of the sampled banks during the period under review. These findings revealed different stakeholder perceptions and financial outcomes, suggesting that improved digital infrastructure, user education, and policy alignment are required to realise the cashless banking’s benefits fully. The study recommends that DMBs avoid a one-size-fits-all digital strategy. Instead, they should tailor digital tools to specific financial performance objectives such as deposit mobilisation, cost efficiency, and profitability.