Analysis of the Impact of Fintech Innovation on Traditional Banking in Lagos State

Financial technology innovation is disrupting traditional banking business models in Nigeria, with Lagos State serving as the epicentre of fintech activity in West Africa. This study analyses the impact of fintech innovation on the traditional banking operations of commercial banks in Lagos State, South West Nigeria. A mixed-methods research design was adopted, combining a survey of 240 commercial bank customers and 60 bank employees with a review of Central Bank of Nigeria licensing data and fintech market reports for the period 2019 to 2023. The impact of fintech was assessed across dimensions of customer deposit attrition, payment service competition, credit origination competition, and revenue structure change. Chi-square tests, independent samples t-tests, and thematic analysis were employed. Results showed that 48% of surveyed bank customers had shifted at least one primary financial service from a traditional bank to a fintech platform in the preceding two years. Bank employees confirmed that payment fee revenues declined by an average of 22% in response to fintech competition. Loan origination speed was cited by 67% of customers as the primary advantage of fintech credit platforms over traditional bank loans. The study concludes that fintech innovation is fundamentally reshaping traditional banking in Lagos State, compelling banks to accelerate digital transformation. Collaboration between traditional banks and fintech firms through open banking frameworks is recommended.

Keywords: fintech innovation, traditional banking, digital disruption, Lagos State, open banking