Technology Driven Financial Innovation in Nigerian Financial Services

Running head: TECHNOLOGY DRIVEN FINANCIAL INNOVATION IN NIGERIAN
FINANCIAL SERVICES
Technology Driven Financial Innovation in Nigerian Financial Services
Name of the Student:
Name of the University:
Author’s Note:

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TECHNOLOGY DRIVEN FINANCIAL INNOVATION IN NIGERIAN FINANCIAL
SERVICES
Declaration

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TECHNOLOGY DRIVEN FINANCIAL INNOVATION IN NIGERIAN FINANCIAL
SERVICES
Acknowledgement

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TECHNOLOGY DRIVEN FINANCIAL INNOVATION IN NIGERIAN FINANCIAL
SERVICES
Abstract

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TECHNOLOGY DRIVEN FINANCIAL INNOVATION IN NIGERIAN FINANCIAL
SERVICES
Table of Contents
Chapter 1: Introduction....................................................................................................................7
1.1 Background of the Study.......................................................................................................7
1.1 Problem of the Study...........................................................................................................13
1.3 Objectives and Hypothesis of the Study..............................................................................13
1.4 Research Questions..............................................................................................................15
1.5 Structure of the thesis..........................................................................................................15
Chapter 2: Literature Review.........................................................................................................17
2.1 Introduction..........................................................................................................................17
2.2 Theoretical Review..............................................................................................................17
2.2.1 Diffusion of the Innovation Theory..............................................................................17
2.2.2 Disruptive Innovation Theory.......................................................................................19
2.2.3 Schumpeterian Theory of Creative Destruction...........................................................19
2.2.4 Nigerian Banking Industry...........................................................................................20
2.2.5 Developing Business Models.......................................................................................20
2.2.6 Sophistication of the customers....................................................................................20
2.2.7 Technology...................................................................................................................21
2.2.8 Regulation and Supervision..........................................................................................21
2.3 Electronic Banking Revolution in Nigeria......................................................................22
2.4 Impact of IT in Nigeria’s Banking Industry........................................................................23

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TECHNOLOGY DRIVEN FINANCIAL INNOVATION IN NIGERIAN FINANCIAL
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2.4.1 GSM Banking:..............................................................................................................24
2.4.2 ATMS...........................................................................................................................24
2.4.3 Telephonic Banking......................................................................................................25
2.4.4 Personal Computer Banking.........................................................................................25
2.4.5 Internet Banking...........................................................................................................26
2.4.6 Branch Networking.......................................................................................................26
2.4.7 Electronic Funds Transfer at the Point of Sale.............................................................27
2.4.8 Banker’s Automated Clearing Services........................................................................27
2.4.9 Banc Assurance............................................................................................................28
2.5 Technology Driven initiatives that boosts the Financial Inclusion.....................................29
2.6 Interest Rates.......................................................................................................................32
2.7 Empirical Studies.................................................................................................................33
2.8 Summary of the Literature Review..................................................................................39
Reference List................................................................................................................................40

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TECHNOLOGY DRIVEN FINANCIAL INNOVATION IN NIGERIAN FINANCIAL
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TECHNOLOGY DRIVEN FINANCIAL INNOVATION IN NIGERIAN FINANCIAL
SERVICES
Chapter 1: Introduction
1.1 Background of the Study
Innovation has been discovered to be an intrinsic aspect of the economic operations for
many millennia. The Nigerian financial sector has gone through incredible transformations in the
last few years. There have been various reforms that have been undertaken in the sector that
leads to the creation of the financial activities, products and organizational forms that have
enhanced and increased the effectiveness of the financial system. The technological advancement
and the transforming economic scenario have generated push for this transformation. All these
enhancements coupled with the transformations in the environment of international finance and
the rising incorporation of international and domestic financial markets have led to the swift
financial innovation. The increasing significance of the financial sector in the modern economics
and swift rate of innovation in this sector has created interest in the research related to
innovation.
There have been various authors who have done researches on mobile and electronic
banking in Nigeria and other neighbouring countries and Bello (2014) has examined the effect of
technology and mobile banking on the transactions costs of microfinance organizations where it
was discovered that innovation has decreased transaction cost in a considerable manner even
though they were not directly impacted by the banks due to the small customer base. The present
research is different from Berg and Fuchs (2013) as the rate of innovation and the total numbers
of banks who have incorporated the innovation have increased.
Mehrota and Yetman (2015) undertook an examination on the relationship among
financial performance and electronic banking of the commercial banks in Nigeria where attention