Fintech Revolution and Banking Sector Stability in Nigeria
Abstract
The financial technology (FinTech) revolution has significantly reshaped the structure, operations, and stability of financial systems, particularly the banking sector worldwide. In Nigeria, the emergence of digital banking platforms, mobile payment systems, blockchain technology, peer- to-peer lending, agency banking, and electronic financial services has reshaped the traditional financial landscape. This paper examines the relationship between FinTech innovation and banking sector stability in Nigeria. The study explores the conceptual foundations of FinTech, the dimensions of banking sector stability, theoretical underpinnings, empirical evidence, opportunities, challenges, and policy implications of FinTech development in Nigeria. The paper adopts a descriptive and analytical approach, using secondary data from the Central Bank of Nigeria, the Nigeria Deposit Insurance Corporation, the Securities and Exchange Commission, scholarly journals, and institutional reports. Findings indicate that FinTech has improved payment efficiency and banking innovation, while also introducing concerns related to cybercrime, data privacy, regulatory uncertainty, operational risk, and systemic vulnerabilities, which may affect the banking sector's stability in the long run. The study concludes that although FinTech contributes positively to banking sector development, its benefits can only be sustained under an effective regulatory framework capable of addressing cybersecurity threats, operational risks, and macroeconomic instability in Nigeria. The study recommends strengthened regulatory oversight, collaborative frameworks between traditional banks and FinTech firms, enhanced consumer protection policies, and investment in digital infrastructure.