Traditional lending in Nigerian financial system and the emergence of Fintech

Abstract

This study explores the evolving relationship between FinTechs and traditional banks in Nigeria, focusing on their impact on customer acquisition and lending volume. Using survey data and econometric analysis (Pool Ordinary Least Squares) regression, the study examines the influence of innovation, bank size, and bank model on customer acquisition and lending volume. Following the estimation of the models, the study finds that innovation attracts customers for both FinTechs and traditional banks. Moreover, FinTechs have a significant advantage in acquiring new customers due to perceived accessibility and convenience, while larger banks maintain dominance in average consumer lending per year. The relationship between FinTechs and banks is complex, exhibiting both complementary and substitution effects. In view of the above, the study recommends the need for continued innovation while ensuring consumer protection and financial stability. Other recommendations include creating a level playing field for all financial institutions, leveraging unique strengths, and effectively targeting specific customer segments. Additionally, further research on nuanced dynamics and long-term effects is suggested.