Financial Technology and Financial Inclusion in Nigeria

Abstract

This study investigated the effect of financial technology (FinTech) on financial inclusion in Nigeria over the period 2000–2024. Nigeria has seen rapid advancement in FinTech-driven innovations, including mobile banking, internet banking, agent banking, and digital payment systems, which are widely embraced as fundamental instruments for mitigating financial exclusion, particularly among rural and low-income communities. The study utilized yearly secondary data sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin and the World Bank. An Autoregressive Distributed Lag (ARDL) model was used to assess the effect of selected FinTech, namely the volume of Automated Teller Machine (ATM) transactions, point-of-sale (POS) transactions, and mobile banking transactions on the financial inclusion index. The ARDL results confirmed existence of a long-run association between FinTech indicators and financial inclusion. Empirical findings showed that ATM and POS transaction volumes exerted a significant negative effect on the financial inclusion, while mobile banking transactions had a positive but weak long-run effect. Notwithstanding the rising adoption of FinTech, drawbacks such as insufficient digital infrastructure, cyber insecurity, low levels of financial literacy, and regulatory inconsistencies continue to undermine effectiveness of FinTech in deepening financial inclusion. Consequently, the study recommended that policymakers strengthen regulatory frameworks, invest in digital infrastructure, and intensify financial literacy initiatives to promote inclusive and sustainable financial inclusion through FinTech innovations. Finally, this study is anchored on the financial intermediation and technology diffusion theories because core intermediation functions are performed through FinTech innovations thereby giving financial services to populations that were previously excluded.