Mobile Banking Transactions and Bank Profitability in Nigeria
Abstract
Technological revolution in banking sector in Nigeria has enabled a rapid transformation of banking operations, particularly through the field of digital / mobile banking operations. The mobile banking will be major contributor to bank profitability, operational efficiency, reach to more customers and lowering the cost of transactions. The emergence of mobile banking in Nigeria has brought a great transformation in the way banks are functioning and competing. With increased use of mobile-based channels by more financial institutions as a way of enhancing service delivery, reducing costs of transactions and increasing financial inclusion, it is highly anticipated that these online applications can indeed increase profitability. Nevertheless, even with these consistent growths in mobile banking adoption that have been supplemented by the rise in digital literacy, growth of smartphone use, and regulatory support, unstable levels of profits are still being witnessed by many banks in Nigeria. Therefore, this research paper discusses how digital banking operations influence profitability in Nigeria banks, using the error correction model with quarterly Time Series Data between the year 2009 and 2023. The variables used in this research were; ROA (Return on assets used as proxy of banks profitability), Mobile banking transactions and the Automated Machine transactions and Point of sale transactions. Based on the research finding; mobile banking affects the profitability of banks positively though the direct impact is not significant at the moment. The statistical significance of ATM transactions regarding bank profitability is insignificant in both current and lagged periods. On the same note, POS transactions positively correlates with the profitability of the bank, although the correlation is not statistically significant. The research therefore advised on reinforcement of Mobile Banking Platforms in an effort to enhance profitability in the long run. Marketing of Custom
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