Digital Payment Systems and the Performance of Deposit Money Banks in Nigeria

Prof. Ime T. Akpan; Bassey; Joshua Etim

doi:10.56201/ijbfr.vol.12.no4.2026.pg34.54

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Digital Payment Systems and the Performance of Deposit Money Banks in Nigeria

Prof. Ime T. Akpan, Bassey, Joshua Etim

Abstract

The researchers examined the influence of digital payment systems and the performance of deposit money banks in Nigeria. The study was borne out of the desire to empirically assess which of the digital payment systems would influence the performance of deposit money banks by taking into consideration the basic payment systems used by deposit money banks and how to use it to boost its performance. The main objective of the study is to examine the influence of digital payment systems on the performance of Deposit Money Banks in Nigeria. We adopted the ex post facto design. Three hypotheses were tested using both the descriptive and inferential statistical techniques and the result shows that there is a significant relationship between digital payment systems and performance of Deposit money Banks in Nigeria. We concluded that the deposit money banks who have not evolved and moved towards embracing digital payment systems, have achieved above-average in terms of growth and are finding it hard competing and measuring up to its counter parts in the financial industry who have fully embraced digital payment systems and who also keep evolving. It was recommended that Deposit money banks in Nigeria who make use of the digital payment systems (ATM, POS and mobile banking) services should come up with ways of improving the transactions through these platforms as this has a positive impact on their cost efficiency. The challenges encountered by digital payment users such as it being out of service, temporary unable to dispense cash, debiting without dispensing the cash and security challenges should be addressed by deposit money banks to encourage more users. Moreso, transactions on these platforms should be properly regulated and monitored to minimize fraudulent activities. Background to the Article Digital technologies have transformed and restructured the way in which financial institutions operate and deliver their services worldwide. Technology is changing at a rapid pace, enabling faster change and progress, causing an acceleration of the rate of change. The banking industry all around the world are progressively embracing and becoming more connected to information technology infrastructure, which makes banking operations, services, and commercial activities more accessible, faster, efficient, and effective for individuals and businesses. The rise in internet access has also transformed banking which has led to online banking, mobile banking and Fintech innovations. The Nigerian banking landscape has undertaken a massive shift from traditional and manual operation to an inter and intra connected digital ecosystem. Banking is no longer driven by visiting physical branches but by gaining access to digital platforms, made possible by development in information and communication technology. Traditionally, banks performed their various functions manually and this system of banking had a lot of weaknesses which included making customers visit the banking premises for transactions to be consummated, making cash handling costly, delays in service processes, limited number of services to be provided, fraud, over working the employees and many more. However, with the adoption of advanced technology and numerous technological enabled systems, it is to be sought to know if it reduces the present challenges and if it also enhances service delivery of banks. Banks who have not been able to advance and properly grasp the use of digital banking infrastructure around the world are facing increased competition due to financial technology companies in the market and the implementation of technological innovations by some banks. Banks in Nigeria and who are regulated by the central bank of Nigeria have fully embraced ICT tools widely regarded as electronic banking (e-banking) such as automated teller machines , point-of-sale systems, mobile banking (MB), and core banking platforms like NIBSS (Nigerian Inter Banking Settlement System) instant payment , etc. as part of CBNs push towards a cashless economy also assists to improve work efficiency, streamline internal operations, and enhance managerial decision-making. The deregulation of the banking sector in 1986 marked the evolution of e-banking in Nigeria (Oluwatolani et al., 2011; Gbanador, 2023). Nevertheless, the prominent use and deployment of electronic infrastructure as alternative payment systems in Nigeria started in 2012 following the

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Digital Payment Systems and the Performance of Deposit Money Banks in Nigeria

Abstract

References

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