Technology-based banking and bank deposit: The Nigerian commercial banks’ experience

In this paper, we theorize a novel mechanism by which technology-based banking services – automated teller machines (ATMs), point of sale (POS), mobile and internet banking – stimulate bank deposit growth based on observed practical experiences. The autoregressive distributed lag (ARDL) bounds-testing and Granger causality approach were used to analyze the short-run, long-run and causal relationships among the variables for the period of 2006 quarter 1 to 2019 quarter 4. Since a long-run cointegrating relationship exists among the variables, the study proceeded with an error correction model (ECM). The results of the ARDL-ECM based analysis revealed that number of ATMs and value of POS transactions have a significant positive relationship with total bank deposits in Nigeria, both in the short run and long run. Those of mobile and internet banking were found to be negative and insignificant signifying that there is still low penetration of mobile and internet banking in Nigeria. Also, the Granger causality test result revealed that only the number of ATMs has a causal influence on bank deposits, suggesting that continuous deployment of ATMs by commercial banks is seen as the best strategy to boost deposit growth. Based on the findings, the study recommends that banks in Nigeria need to partner with the telecommunication sector to improve their network coverage and provide a fast and reliable network that is necessary for mobile and internet banking to thrive.