Academic presentstions

1. Assessing The Effect of Financial Technology Innovation on Financial
Performance of Quoted Deposit Money Banks in Nigeria (DMBs)
By
YUSUF HYELUWA
Department of Accounting,
Bingham University, Karu, Nasarawa State.
Email: yusufhilson@gmail.com
Phone No: +2347036044968
MICAH AYUBA MAIVA
Department of Banking and Finance,
University of Maiduguri
Email: ayubamaivamicah@gmail.com
Phone No: +2348065063978
ORBUNDE BEMSHIMA BENJAMIN, Ph.D
Department of Accounting,
Bingham University, Karu, Nasarawa State
Email: benorbunde@gmaul.com
Phone No: +2348065318098

2. Introduction
Financial technology innovation in financial services is broadly referred to as new dimension of
financial services. The emerging of twenty first century, the term was initially applied to the
technology employed at the back-end systems of established financial institutions. Since then,
however, there has been a shift to more service-oriented and a more service-oriented definition.
Financial technology innovation embodies different sectors and industries such as education;
financial technology innovation involves any new technology or innovation that disrupts
traditional ways of conducting financial transactions.
Financial technology innovation includes all software and other modern technologies used by
business that provide automated and improved financial service delivery. Such technology
innovation in financial service delivery is expected to eliminate barriers access to banking
services, encourage the use of bank services and ultimately contribute to national economic
growth (Asian Development Bank, 2016).
Financial sector has over time developed successfully with financial technology innovation
products and services available in financial markets. Some of these products are electronic fund
transfer, mobile banking, credit cards, automated teller machine cards and others which
facilitate the use of electronic means of payment and sometimes substitute for the use of
physical cash.

3. Introduction..,
These products gain a wider recognition in financial market leading to reduction of holding
amount of money at hand. The latest service innovations lead to furthering of financial
technology and innovative services offering on to a single platform which will make banking
services more accessible, flexible convenient and more affordable.
Financial markets are becoming increasingly integrated and globalized, and have resulted into
demand for new types of investments. Ability to modernize the financial technology innovation
and its effects have become the germane element which results in to threat existent to deposit
taking financial institutions.
Undoubtedly, the introduction of digital financial innovation and technology has greatly
transformed the Nigerian financial sector however; the extent to which it has increased
participation and accessibility of the financial services remains debatable. Consequently, this
study attempts to determine the effect of digitalization of financial services on the financial
performance

4.  Research Questions
The study pursued an answer to the following research questions:
• What is the effect of mobile banking on return on equity of quoted Deposit Money Bank in Nigeria?
• To what extent does Point of Sale affect return on equity of quoted Deposit Money Bank in Nigeria?
 Objectives of the Study
The overall objectives of this study are to assess the effect of Financial Technology Innovation on Financial
Performance of quoted Deposit Money Bank in Nigeria. However, the specific objectives are to:
• Assess the effect of Mobile banking on the Return on Equity of quoted Deposit Money Bank in Nigeria.
• Examine the extent Point of Sale affects the Return on Equity of quoted Deposit Money Banks in
Nigeria.
 Hypothesis
H01: Mobile banking has no significant effect on the return on equity of quoted deposit money bank in
Nigeria.
H02: Point of Sale has no effect on the return on equity of quoted deposit money bank in Nigeria.

5. Conceptualization
 Financial Technology Innovation
As its core, financial technology innovation is utilized to the help companies and consumers better
managed their financial operations, processes, and lives by utilizing specialized software and
algorithms that are used on computers and, increasingly, smartphones. Financial Technology innovation
is used to describe new technology that seeks to improve and automate the delivery and use of financial
services (Chukunulu, 2021).
 Point of Sales (POS)
Pont of sales (POS) is referred to as point of purchase (POS) or checkout is the location where payment
is made in respect of a transaction of an electronic device and card. A POS terminal manages the selling
process by a salesperson accessible interface (Chitokwindo, 2014)
 Mobile Banking
Mobile banking refers to the use of mobile device to carry out financial transactions. The service is
provided by some financial institutions, especially banks. Mobile banking enables clients and users to
carry out various transactions, which may vary depending on the institution.
 Return on Equity
Return on equity (ROE) is measure of financial performance calculated by dividing net income by
shareholders` equity equal to a company`s asset minus its debt, ROE is considered the return on net
assets. ROE is considered a gauge of a corporation’s profitability and how efficient it is generating
profits (Kamau & Oluoch, 2016).

6. Empirical Literature
 Chukwunulu and Ibenta (2021) carried out a study to investigate the effect of financial innovation
on efficiency of financial intermediation of commercial banks in Nigeria between the periods of
2008 to 2018. The finding shows that financial intermediation in Nigeria is inefficient.
 Ibekwe (2021) carried out a study to examine the effect of financial innovations on the performance
of deposit money banks in Nigeria. The finding shows that automated teller machine, mobile
banking and point of sales have positive and significant effect on return on asset while internet
banking has negative effect on the profitability of commercial banks.
 Effiom and Edet (2020) carried study to examine the financial innovation and performance of small
and medium scale enterprise in Nigeria. The finding indicate that financial innovation has a positive
and significant effect on the SME`s productivity in Nigeria.
 Young, Ediri and Daniel (2017) carried out a study to investigate on Strategic Financial Innovations
and Performance of Oil firms in Nigeria. The findings revealed that strategic innovation has an
impact on organizational performance.

7. Theoretical Review
 Diffusion of Innovation Theory
The diffusion of innovation theory was propounded by Roger (1995) explains the approach through
which innovation can be passed via different stages over a certain period among different users. It
explores the ways innovative ideas are passed from one generation to the other.
 Silber’s Constraint theory of Financial Technology Innovation
This theory was propounded by Silber (1975) with the aim of describing why financial institutions
engaged in financial technology innovations. Silber noted that adoption of financial technology
innovations was an attempt to enhance the profitability of firms through efficiency delivery of
services. The theory views that firms have both internal and external initiated challenges which can
be managed through adoption of technologically enabled processes.
This research work was underpinned on Silber’s constraint theory of financial technology innovation
theory because it provides information on financial technology innovations. Thus, it is important to
know that point of sales and mobile banking are all tools for financial technology innovations.

8. Methodology
The study adopts the Ex-post facto research design. The study makes use of secondary data which was
obtained from financial statement and annual report of quoted deposit money banks. The population of
the study comprises of the fifteen (15) listed Deposit Money Banks on the Nigeria. Group Exchange as
at 31 December, 2021 out of which (12) were selected using purposive sampling spanning from 2013-
2021 for period of eight years. The data was analyzed using panel regression via E-views 10.
S/N Variable Type Proxy Measurement
1 Financial Performance Dependent ROE Net Income/ shareholders` Equity
2 Financial Technology Innovation Independent
Independent
POS
MB
Data collected by various banks when
transaction happens on micro scale,
checkout at retail store handled hardware
and barcode scanners from apps.
Total number of funds transfers between
the customer`s linked accounts, third
parties’ payment including bill payments
and third-party funds transfers.
Measurement of Variable
)

9. Results and Discussion
Pre-Estimation Test
 Descriptive Statistics Results
 Return on equity (ROE) mean with standard deviation is wide range, it implies a stable performance as the standard
deviation indicated that there is no wide dispersion of the data from the mean value.
 From the other measure number of point of sale (POS). This implies that mobile banking in terms of performing
transaction is not volatile during the period as the standard deviation is low compared to mean, together with the wide
range between the minimum and maximum values.
 skewness which measures the shape of the distribution and equally shows the measure of the asymmetry of the data
set, indicated that ROE, POS and MB are all positively skewed have a value greater than zero which suggests that the
distribution tailed to the right-hand side of the mean.
 Kurtosis value measures the Preakness and flatness of the distribution of the series. If kurtosis value is less than 3, it
means the distribution of the variable is normal, but when it is more than 3, the distribution of the variable is said to be
abnormal. ROE and NMB is less than three and is called platykurtic (fat or short-tailed) and qualities ROE and MB
qualified for this during the study. POS is greater than three is called leptokurtic (slim or long tailed)
 The Jarque-Bera statistics if for testing normality of a variable. Jarque-Bera also measures the difference between the
Skewness and kurtosis of each of the variables. Pont of sales (POS) has the highest Jaque-Bera value of 53.69841
while mobile banking (NMB) has the value respectively.

10. Results and Discussion
Pre-estimation Test
Correlation Matrix
ROE and POS, ROE and MB shows that there is positive relationship between the dependent (ROE) and
independent variables (POS and MB) respectively. Thus, the relationship between is ROE and POS is not strong
but is positively and that of ROE and MB is strong positively as well.
 Likelihood Ratio Test Result
The results of fixed effect likelihood ratio test shows that the chi-square statistics value and probability values of
0. 0000. the likelihood ratio test statistics as presented by corresponding probability value is greater than 0.05.
 Hausman Test Result
Hausman results is based on probability value, if P-value is greater than 0.05 random effect is rejected and fixed
effect is accepted as the best suited model. Similarly, if the P-value is less than 0.05 the random effect is accepted
while the fixed effect is rejected. Fixed effect model is the most appropriate model for the sampled data showing
the probability of less than 0.05.
Test of Hypothesis
The coefficient of multiple determinations (R-Square) with the value (0.670599). This succinctly indicate that 67%
total variation in return on equity (ROE) is captured by the variables (POS and MB), while the remaining 33% of
the variation in the model is captured by the error term. This shows that POS and MB are positively related to
ROE. As such an increase in ROE will burst POS and MB
At 5% level of significance, the variable (POS) is statistically insignificant with the probability value (0.6862)
which is greater than 0.05 this clearly shows that the null hypothesis is accepted and the alternate is rejected based
on the probability value results outcome

11.  Discussion of Findings
• (H01) shows that mobile banking has a positive and significant effect on return on equity and this implies that
(MB) is significantly an independent predictor of financial performance of deposit money bank in Nigeria
proxied by (ROE). This finding is in agreement with the finding of Ibekwe (2021) who find that mobile
banking contribute to the financial performance of deposit money banks in Nigeria.
• (H02) shows that point of sale has negatively and insignificant effect on the financial performance of quoted
deposit money banks proxied by (ROE). This finding was in-line with the work of Chukwunulu and Ibenta
(2021) who found out that point of sale has insignificant effect on financial performance and does not
contribute to banks performance.
 Conclusion
Findings shows that the (ROE) financial performance of quoted deposit money banks is significantly enhanced by
financial technology innovation tools (mobile banking) alternatively point of sales does not contribute to the
(ROE) performance of deposit money banks in Nigeria.
 Recommendation
• Financial manager should improve service quality delivery to customer awareness in cases of lost, broken,
damaged or stolen cards, fraud and other customer complaints in relation to financial technology innovation
tools point of sale (POS) to enhance the performance of deposit money bank in Nigeria.
• There should be requisite for financial managers of deposit money banks in Nigeria to safeguarding simple way
to use and customer collaborative features in mobile banking and online shopping systems in other to hasten the
performance of deposit money banks in Nigeria.