THE IMPACT OF DIGITAL INNOVATION ON THE PERFORMANCE OF THE NIGERIAN BANKING SECTOR

ABSTRACT

The Nigerian banking sector is a very competitive Sector. In order to beat the competition and gain more customers, banks have to render more benefits to their customers. Hence the adoption of digital innovation. Despite many studies showing the benefits of digital innovation, concerns have been raised on the effect digital innovation will have on the performance of the Nigerian banking sector. Accordingly, this study was carried out to determine the effect of digital innovation on the performance of the Nigerian banking sector. Ex post factor research design was adopted for the study. The population of the study comprises all the banks in Nigeria. Quarter time-series data from Q1 2010 to Q1 2023 was obtained from the economic reports and statistical bulletin of central bank of Nigeria. The data was analyzed using correlation analysis and Ordinary Least Square method. Total profits was used to measure bank performance and the volume and value digital banking tools such as ATM, POS, Internet Banking, Mobile banking and USSD was used to measure digital banking. The result of the study indicates that digital innovation does have an Impact on the performance of Nigerian banks despite the fact that a positive and insignificant relationship exists between that the relationship between the volume of POS and the value and volume of Mobile Banking, Internet Banking, USSD and total profit, Mobile Banking value and USSD Volume has a negative and insignificant relationship with total profit and the value of POS transactions has a positive and significant relationship with total profit. The study recommends that banks should Ensure that transactions are secure by implementing security measures like firewalls and virus blockers to protect customers account, Banks should provide easy to use digital platforms that are simple to access across multiple devices mainly via smartphone , Banks should educate their customers about the benefits of digital banking and how to use their digital banking services