Service Innovation and Customer Retention in Nigerian Mobile Money Services: A Quantitative Analysis

This study quantitatively analyses the relationship between service innovation and customer retention in the Nigerian mobile money sector, with evidence from subscribers in Lagos State and Oyo State, South West Nigeria. The mobile money sector in Nigeria has expanded significantly following the Central Bank of Nigeria's Payment Service Bank licensing framework, creating a competitive environment in which service innovation has become a primary differentiation strategy. Despite this competitive landscape, customer churn rates among mobile money platforms remain high, raising questions about whether innovation investments are effectively translating into retention outcomes. Grounded in service-dominant logic and the technology acceptance model, the study operationalises service innovation across process innovation, interface innovation, and financial product innovation dimensions. A cross-sectional survey of 400 mobile money users is conducted using stratified random sampling. Structural equation modelling is the primary analytical technique, with confirmatory factor analysis used to validate measurement scales. The study also tests the mediating role of user satisfaction in the innovation-retention relationship. Preliminary findings reveal that interface innovation (ease of use improvements) produces the strongest direct effect on retention, while financial product innovation shows a significant indirect effect mediated by user satisfaction. Process innovation effects are significant only among high-frequency transaction users. Recommendations are directed at mobile money service providers, fintech developers, and the CBN on prioritising interface and product innovation investments for maximum retention impact. Keywords: service innovation, customer retention, mobile money, fintech, Nigeria