Nigeria's Fintech Conundrum: Weighing the Trade-offs Between Financial Inclusion, Innovation and Monetary Policy Effectiveness

Technological evolution has been responsible for the disruption of traditional systems within various spheres of human endeavors including the financial system. Although this evolution has been considered by some to be the tailwind that would propel seamlessness within the system, some others have welcomed it with mild to extreme paranoia. More concerning is the stance of various global regulators on the financial technology (fintech) revolution which does not appear to be consensual. Some regulators consider fintech revolution as the “next big thing” that should be allowed to thrive while some consider it to be the potential bane of the financial ecosystem; leading to conflicting regulatory approach towards fintech across the world as some regulators allowed the thriving of fintech in many forms while others maintain extreme conservative stance such as the imposition of ban and even potential prosecution. However, either for or against, the concern of all regulators can be summarized into one which is the implication of this revolution on monetary policy effectiveness. Thus, this study examined the effect of financial technology disruption on monetary policy effectiveness in Nigeria between 2012 and 2022. The study measured monetary policy effectiveness via inflation rate as the rate of inflation within the economy remains a major pointer to the effectiveness of the monetary policies of the government. Also, as measures of financial technology, Bitcoin (BTC) price, volume of Automated Teller Machines (ATM), Point of Sale (POS) and mobile money transactions were used as independent variables in the study. The ordinary least square (OLS) technique was used for analysis in the study and it was reported that fintech disruption has no significant effect on monetary policy effectiveness in Nigeria. Therefore, it is recommended that a synergy should be created between the Fintech ecosystem and the monetary system in Nigeria via a single encompassing reporting framework covering all the various components of Fintech system in Nigeria including cryptocurrency.