The Impact of Financial Technology (FinTech) Innovations on Bank Profitability in Nigeria: A Panel Data Analysis

The rapid advancement of Financial Technology (FinTech) has transformed banking operations globally by introducing digital payment channels such as Automated Teller Machines (ATMs), Point of Sale (POS) systems, and Internet Banking platforms. In Nigeria, the implementation of the Central Bank of Nigeria's cashless policy accelerated the adoption of these technologies among deposit money banks, with the expectation of improving operational efficiency, customer convenience, and profitability. Despite the increasing investment in digital banking infrastructure, existing empirical evidence on the profitability effects of FinTech channels in Nigeria remains mixed and inconclusive. While some studies report positive contributions of electronic banking services to bank performance, challenges such as high infrastructure costs, cybersecurity concerns, and uneven adoption rates suggest that the impact of each FinTech channel may differ, thereby necessitating a recent channel-specific analysis of Nigerian banks. This study investigates the impact of financial technology (FinTech) innovations, namely Automated Teller Machines (ATM), Point of Sale (POS), and Internet Banking (INB) on the financial performance of deposit money bank in Nigeria from 2015 to 2024. EViews 13 was employed to conduct panel Least Squares regression, unit root tests, and Granger causality analysis, with secondary data provided by five listed institutions. The performance proxy was Return on Assets (ROA). The findings suggest that POS transactions have a substantial positive impact on ROA, whereas ATM transactions have a positive but insignificant influence. Internet banking exhibits a predictive relevance with Granger causality, despite a negative and insignificant relationship with profitability. The model explains 47% of the variations in ROA. The study concludes that FinTech channels influence bank performance differently, with POS transactions exhibiting the strongest profitability effect. It recommends a strategic increase in the adoption of internet banking and a long-term investment in point-of-sale infrastructure. This study contributes to the growing FinTech literature by providing recent multi-channel empirical evidence from an emerging economy context.