Background
Fintech is a word developed from Financial Technology. It encompasses computer programs and other technology used to support or enhance financial services like banking. It is the integration of technology into financial services. Fintech is a sector that is quickly growing and expanding in most countries worldwide. It has so far proved to be of significant additional value to a system’s economy. However, in some countries, it represents an entirely new approach to financing. It may therefore require additional support in terms of consumption. As with any other innovation in any sector, it is experiencing massive growth.
Fintech has had the most resistance in usage in Nigeria, specifically. Nigeria is one of the most populous countries on the African continent, and, as is well known, Africa is home to many developing countries; hence, technology is relatively new, and therefore, more information is needed about how they receive it (Scouter et al., 2019). However, Fintech is used the most in Nigeria out of any African country because of its large population. Fintech is the most popular sector in startup funding, and the trend is only continuing to advance further.
Research shows that Fintech will attract 67.8% of the total funding in Nigeria in 2022. Fintech is a financial technology that uses modern technology to provide financial services (Scouter et al., 2019). In Nigeria, Fintech has grown tremendously due to its advantages in terms of credit and efficiency. Fintech has helped to boost the ability of many people to access financial services and has made it easier for people to get loans.
Across Africa, Nigeria is the third-largest consumer of Fintech. This shows the potential that it has as a country to incorporate more. Despite outstanding achievements and more than 50% of its population being aware of the innovation, the challenge of its adoption is the focus of the study, addressing the gap between awareness and adoption of Fintech. The number of startups adopting has steadily risen from 311 in 2019 to 564 in 2021. This supports the hypothesis that when the gap is filled, 71% of capital accounted for by Fintech in Nigeria will increase to over 90%, making the economy more substantial and financially stable.
Fintech has, without a doubt, tremendously grown through banking and phone banking. With banking, most of the population is underserved due to a shortage of resources, which creates a lack of access to services, especially in rural areas. Therefore, frustration and poor customer experience have allowed Fintech to flourish. The adoption of Fintech in Nigeria is growing rapidly due to its enhancements, such as instant loans, flexible savings, and affordable payments. The growing number of youths using smartphones has led to an increase in cashless payments, contributing to Nigeria’s thriving Fintech culture.
Despite the potential advantages that Fintech brings and its economic contribution to Nigeria’s economy, there is still a need for greater adoption of Fintech in the country. This research study aims to identify the reasons behind this and explore various problems in Nigeria’s Fintech ecosystem. In addition, this study will propose innovative solutions that can be adopted to create a more conducive environment for Fintech in Nigeria.
Literature Review
Fintech organizations in Nigeria are increasingly focusing on digital payment systems because Nigeria is a large and growing market with a population of over 200 million and a high mobile penetration rate. Financial literacy has been identified as an essential factor that influences the adoption of Fintech in Nigeria. According to a study by Nwobu (2022), financial literacy is one of the essential prerequisites for the successful adoption of Fintech. With sufficient financial literacy, users can understand and use the new technologies. The study further suggests that improved financial literacy can improve the trust level of customers in the banking system and thus encourage more customers to use the new technology.
However, despite the advantages of financial education, some scholars have raised questions about its effectiveness. These scholars have based their arguments on deficiencies in some aspects of financial education. For example, they have cited a lack of a mutually agreed-upon meaning of financial education, literacy, or capability.
Literacy is having competence or basic knowledge, while education is the means through which that capacity is built. A majority of broad-based financial education programs focus on offering identical money management skills across all age groups. This may fail to address the concerns of a particular age group, such as youth, which raises questions about the effectiveness of such a financial literacy program.
Another study found that trust in the banking system is a significant factor influencing the adoption of Fintech in Nigeria. The research suggested that customers who trust the banking system are more likely to adopt Fintech (Akinwale & Kyari, 2022). Trust in the banking system is crucial for the successful adoption of Fintech and the country’s economic development.
The fault attributed to the study’s findings is that there is a global decline in trust in the financial system, including banks, particularly following the 2009 financial crisis. The 2009 financial crisis led to a loss of trust in banks and other financial institutions, resulting in a decrease in the use of banking services. The study did not consider the effect of other factors, such as government regulation, on bank trust; therefore, the findings need to be more accurate in predicting how trust levels affect bank use.
Doraisamy et al. (2022) found that age, gender, and income level are other key aspects influencing the adoption of Fintech. Solarz and Swacha (2021) suggested that customers who are younger, male, and have higher incomes are more likely to adopt Fintech compared to those who are older, female, and have lower incomes. Most Fintech users in Nigeria are youths, likely because younger generations are more familiar with mobile technology and tend to be tech-savvy.
According to a 2017 survey conducted by the Nigerian Interbank Settlement System (NIBSS), the majority of Fintech users in Nigeria are male. This may be attributed to the fact that men are more likely to be employed and have access to higher education and digital literacy levels. Additionally, men may be more likely to take risks and embrace new technologies. However, to ensure the utmost effectiveness of Fintech, considering all age groups and financial income levels is essential.
Akinwale and Kyari’s (2022) work examined the factors influencing attitudes and intentions to adopt financial technology services among end-users in Lagos State, Nigeria. The researchers used a quantitative approach, surveying 400 individuals in Lagos State. The findings indicated that respondents had a positive attitude towards financial technology services and that most were likely to adopt these services in the future. The most important factors influencing this attitude and intention were convenience, security, and cost-effectiveness.
The key barriers preventing widespread Fintech adoption in Nigeria are limited internet access, inadequate infrastructure, and a lack of public awareness. Mogaji et al. (2021) specifically highlight that deficiencies in internet access and infrastructure restrict customer use of Fintech. They emphasize that increasing awareness and educating customers about the advantages of Fintech is necessary to improve adoption rates. Separately, factors such as age, gender, and educational background are also crucial in determining who adopts Fintech. This research intends to explore these demographic and other gaps to better understand their influence on adoption rates.
Despite all the advantages Nigeria has in terms of Fintech, a gap exists that creates a barrier between having information about Fintech and actually consuming the service. How do Fintech implementers approach the issue? This is a question that warrants in-depth evaluation. The existing literature needs to address that gap, which may be the greatest hindrance to the success of Fintech in Nigeria. Most importantly, how can that gap be closed? What overlooked factors can be re-examined to help bridge the gap? These questions will be a guide.
Aims and Objectives
- To explore the factors driving the adoption of Financial Technology (Fintech) in Nigeria, such as consumer attitudes towards technology, regulatory policies, access to technology, and economic conditions.
- To provide useful insights for policymakers, Fintech companies, and other stakeholders interested in promoting the use of Fintech in Nigeria.
- To identify potential areas for further research to better understand the factors influencing Fintech adoption in Nigeria.
The researcher proposes the following research questions:
- What are the different factors that enable consumers to adopt Fintech in Nigeria?
- What are the different inhibiting factors that reduce Fintech adoption in Nigeria?
- Which identified factors could most effectively increase Fintech adoption by organizations in Nigeria?
The research hypothesis is suggested as follows: “Consumers and organizations in Nigeria’s adoption of Fintech are influenced by a combination of enabling and inhibiting factors, including technical, economic, social, and regulatory factors.”
Research Philosophy
A philosophical approach to pragmatism will be used for the study. Pragmatist philosophy emphasizes the practical consequences of ideas, actions, and beliefs. In research, pragmatism is often characterized by a focus on practicality, usefulness, and the application of research findings to real-world problems and situations.
One of the key features of pragmatism is its emphasis on using the most appropriate methods and approaches for addressing specific research questions and problems. This means that pragmatism allows researchers to be flexible in their choice of data collection and analysis methods and to use qualitative and quantitative methods to address their research questions (Tamminen & Poucher, 2020).
Other philosophies, such as idealism, positivism, and determinism, are unsuitable for the study because they focus more on abstract concepts and theories and less on practical solutions (Tamminen & Poucher, 2020). Idealism, for example, is concerned with the power of ideas and beliefs, and thus does not consider the real-world context in which Fintech adoption occurs.
Positivism focuses on the scientific method and objective data, but overlooks the numerous forces that can influence the adoption of Fintech. Determinist philosophy posits that forces beyond our control dictate all actions, thereby precluding the active role researchers must take to understand the influences on Fintech adoption in Nigeria. Therefore, pragmatism is particularly useful due to its emphasis on practicality and the application of research findings to real-world problems.
Research Design
Research design is a plan or framework for conducting research. It is important to have a research design because it helps ensure that the research is conducted systematically, rigorously, and ethically (Dannels, 2018). A good research design should also be flexible and adaptable if the need arises during the research.
Approach
An inductive approach will be employed, beginning with a large dataset and using it to generate new theories or hypotheses. An inductive approach will involve collecting a large amount of data through surveys, interviews, or observations and using this data to identify patterns or trends that can be used to develop new theories about the factors influencing Fintech adoption in Nigeria, unlike the deductive approach, which relies on existing theories or hypotheses to form predictions and test them against data that may not be applicable to the study context (Dannels, 2018). The inductive approach would involve starting with a broad research question or area of interest and using the data to identify specific patterns or trends that can be used to formulate new hypotheses or theories.
Type of Study
We will conduct an exploratory study to gather initial information on Fintech adoption in Nigeria. This research aims to find trends and patterns that can be used to build new theories about what influences adoption. We’ll use both interviews and surveys (qualitative and quantitative methods), drawing data from experts, users, and existing records. An exploratory study is the best fit for this research because it allows us to investigate a new and complex topic in depth, generating fresh ideas, unlike a descriptive study, which typically establishes a baseline.
Strategy
Different strategies will be employed to conduct the study, tailored to the specific research questions being addressed and the available resources. A survey will be used to gather data on the drivers influencing Fintech adoption in Nigeria by designing a questionnaire that asks questions about participants’ attitudes towards technology, use of Fintech services, and other factors that might influence adoption. Surveys will be conducted online, by phone, and in person. To understand consumers’ adoption of Fintech, the study will focus on collecting data from a representative sample of consumers in Nigeria.
Data Collection and Analysis
Both primary and secondary data will be collected for the research study. Primary data will be collected through surveys and in-depth interviews. In contrast, secondary data will include census data, government statistics, and data from previous research studies. The researchers will identify the data sources that are most relevant to the research study, including specific institutions or organizations that collect data on Fintech adoption in Nigeria. The researchers will contact the relevant institutions or organizations to request access to the data, providing a detailed description of the research study and explaining how the data will be utilized.
Before accessing the data, the researchers will obtain the necessary permissions or approvals. The researchers will work with the institutions or organizations to determine the most appropriate way to access the data. This may involve downloading data from a website, receiving data in a specific format, or collaborating with the institution or organization to tailor the data for the research study. The researchers will follow any specific guidelines or procedures for accessing and using the data.
The study will use a mixed-methods approach to collect data on the factors influencing Fintech adoption in Nigeria. Specifically, the study will employ a survey to collect quantitative data on factors such as awareness, knowledge, and attitudes towards Fintech, as well as behavioral measures of adoption, including usage frequency and spending. In addition, the study will also use focus group discussions and in-depth interviews to collect qualitative data and explore other factors influencing Fintech adoption in Nigeria.
The data collected through the qualitative and quantitative phases of the research study will be analyzed using both quantitative and qualitative methods. Quantitative data analysis will involve using descriptive statistics, regression analysis, and structural equation modeling (SEM) to analyze the collected data. Descriptive statistics will be used to summarize the collected data. Regression analysis will identify the relationships between the various variables and the determinants of FinTech adoption. SEM will be used to test the hypotheses developed in the literature review. Additionally, qualitative data analysis will be conducted using thematic analysis to provide an in-depth understanding of the collected data. Thematic analysis will involve coding the qualitative data into themes and then analyzing the data within the context of the research question.
Ethical Considerations
Informed consent will be obtained from all participants. Clear guidelines for data protection and confidentiality will be provided, ensuring the accuracy of data. Participants’ privacy will be respected, and they will be informed about the research objectives, potential benefits, and risks. These measures will help ensure that the research project is conducted in an ethical and responsible manner.
References
Akinwale, Y. O., & Kyari, A. K. (2022). Factors influencing attitudes and intention to adopt financial technology services among the end-users in Lagos State, Nigeria. African Journal of Science, Technology, Innovation and Development, 14(1), 272–279.
Dannels, S. A. (2018). Research design. The reviewer’s guide to quantitative methods in the social sciences (pp. 402-416). Routledge.
Doraisamy, B., Appannan, S., M Varatharajoo, P., Shanmugam, J. K., & Woo, H. K. (2022). Empirical research on factors affecting customer satisfaction towards fintech products and services in Sungai Petani, Kedah. Journal of Academia, 10.
Mogaji, E., Balakrishnan, J., Nova, A. C., & Nguyen, N. P. (2021). Emerging-market consumers’ interactions with banking chatbots. Telematics and Informatics, 65, 101711.
Nwobu, E. K. (2022). Electronic Payment System: Effect on Financial Inclusion in Nigeria. Doctoral dissertation, Dublin, National College of Ireland.
Saunders, M., Lewis, P., & Thornhill, A. (2016). Research Methods for Business Students. London: Pearson Education Limited.
Solarz, M., & Swacha-Lech, M. (2021). Determinants of the adoption of innovative fintech services by millennials.
Tamminen, K. A., & Poucher, Z. A. (2020). Research philosophies. The Routledge international encyclopedia of sport and exercise psychology (pp. 535–549). Routledge.