Fintech and the Profitability of Deposit Money Banks in Nigeria

This study empirically examines the effect of Financial Technology (Fintech) adoption on the profitability of Deposit Money Banks (DMBs) in Nigeria over a 26-year period from 2000 to 2025. Adopting an ex-post facto research design, secondary time-series data were compiled from Central Bank of Nigeria (CBN) Statistical Bulletins, Nigeria Inter-Bank Settlement System (NIBSS) reports, and bank financial statements. Bank profitability was operationalised using Return on Assets (ROA), while Fintech adoption was disaggregated into three core transaction channels: Mobile Banking Transaction Value (LnMBTV), Point-of-Sale Transaction Value (LnPOSTV), and Web/Internet Banking Transaction Value (LnWIBTV). Employing Ordinary Least Squares (OLS) multiple regression analysis alongside rigorous diagnostic and stationarity tests, the empirical results reveal that Mobile Banking Transaction Value and Web/Internet Banking Transaction Value exert positive and statistically significant effects on bank profitability (ROA). Conversely, Point of Sale Transaction Value demonstrated a negative and statistically insignificant impact, largely attributable to high terminal acquisition expenses, maintenance overheads, and aggregator cost-sharing structures. The overall model yielded an R2 of 0.5842 and an F-statistic of 10.3082 (p < 0.01), confirming robust explanatory power. Grounded in the Technology Acceptance Model (TAM), Innovation Diffusion Theory, and the Resource-Based View (RBV), the study concludes that digital banking channels are vital drivers of asset efficiency and fee-based income. The research recommends strategic investments in mobile infrastructure and cybersecurity, paired with cost optimisation and restructuring of aggregator fees for POS networks, to maximise net profitability gains from digital financial services in Nigeria.