Financial Technology and Bank Sustainability in Nigeria: Evidence from Efficiency, Financial Inclusion, and Dynamic Effects (2010–2024)

This study examines the effect of financial technology (FinTech) adoption on the sustainability of deposit money banks in Nigeria over the period 2010–2024. Anchored on the Innovation–Stability Framework of Boot and Thakor (2019), the study investigates whether FinTech-driven channels improve bank sustainability directly and indirectly through operating efficiency and financial inclusion. Secondary data were obtained from the Central Bank of Nigeria, the Nigeria Inter-Bank Settlement System, the National Bureau of Statistics, and annual reports of selected banks. The study employs the Autoregressive Distributed Lag (ARDL) model to estimate short-run and long-run dynamics, while Structural Equation Modelling (SEM) is used to examine mediation effects. The findings confirm a long-run relationship between FinTech adoption and bank sustainability. Operating efficiency emerges as the strongest mediating channel and contributes positively to profitability and sustainability. By contrast, financial inclusion exerts a negative mediating effect, suggesting that rapid expansion without adequate risk management may strain bank resources. ATM and POS transactions show positive effects on efficiency and sustainability, whereas mobile banking produces mixed and largely negative outcomes. The study concludes that FinTech can support sustainable banking when supported by effective regulation, strong risk management, and adequate institutional capacity. It recommends policies aimed at improving digital literacy, strengthening cybersecurity, and deepening the regulatory framework for FinTech development in Nigeria.

Financial technology, Bank sustainability, Efficiency, Financial inclusion, Nigeria, ARDL, SEM.

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