Digital Transformation and Performance of the Deposit Money Banks in Nigeria

The paper examined how the digital transformation has impacted the performance of the deposit money banks in Nigeria between 2009H1 and 2024H2. The point-of-sale transactions (POS), web payment transactions (WPAY), and mobile payment transactions (MPAY) were used as proxies of digital transformation, and the performance was evaluated by the ratio of return on assets (ROA), personnel expenses to gross income (PEGI), and the ratio of return on equity (ROE). The research design adopted was ex-post facto research and the secondary time-series data employed was of bi-annual data that was sourced in the Central Bank of Nigeria Statistical Bulletin and Financial Stability Reports. Descriptive statistics, correlation analysis, augmented dickey fuller unit root tests, error correction modelling, ordinary least squares multiple regression, and post estimation Diagnostic tests were used. The findings showed that the statistically significant impact on ROA was jointly with digital transformation (R-squared = 0.3332; F-statistic = 4.6645; p = 0.0091) but POS, WPAY, and MPAY were not significantly significant at the 5 percent level. In the case of PEGI, the impact of digital transformation on personnel-cost efficiency had a significant and statistically significant influence (R-squared = 0.8770; F-statistic = 66.5747; p = 0.0000). In the case of ROE, the combined effect was only very weakly explanatory and statistically insignificant (R-squared = 0.0353; F-statistic = 0.3413; p = 0.7956). The long-run tests based on the residual revealed that the three models had stable long-term relationships and the error-correction terms were not only negative but also statistically significant, which indicated the adjustment of short-run disequilibrium into the long-run equilibrium. It was found that digital transformation is applicable to the performance of deposit money banks in Nigeria, although its impact is greater on the asset profitability and personnel-cost efficiency than on the shareholder return in the period considered. The research suggested more robust digital infrastructure, web-payment optimization, enhanced security architecture, cost-discipline, and integrated channel management.

Digital Transformation, Point of Sale Transactions, Web Payments Transactions, Mobile Payments Transactions, Return on Assets, Personnel Expenses to Gross Income Ratio, Return on Equity.

1. Abdulmalik, M., Lamino, H. A., Maitala, F., & Taiwo, M. (2022). Dynamic linkage(s) between financial innovation and efficiency of deposit money banks in Nigeria. WSEAS Transactions on Business and Economics, 19. https://doi.org/10.37394/23207.2022.19.177 [Google Scholar] [Crossref]

2. Abdulquadri, A., Mogaji, E., Kieu, T. A., & Nguyen, N. P. (2021). Digital transformation in financial services provision: A Nigerian perspective to the adoption of chatbot. Journal of Enterprising Communities: People and Places in the Global Economy, 15(2), 258-281. DOI: 10.1108/JEC-06-2020-0126. [Google Scholar] [Crossref]

3. Adegbie, F. F., Kazeem, K. O., & Owolabi, B. A. (2020). Information and communication technology and sustainable performance of selected listed deposits money banks in Lagos State, Nigeria. International Journal of Sustainability Management and Information Technologies, 6(1), 18-35. DOI: 10.11648/j.ijsmit.20200601.13. [Google Scholar] [Crossref]

4. Adewale, A. A., Shittu, S. A., & Ozabeme, L. S. (2025). Impact of digital payment adoption on cashless policy effectiveness in Nigeria. International Journal of Economics, Business and Management, 2(1), 48-66. DOI: 10.59568/IJEBM-2025-2-1-04. [Google Scholar] [Crossref]

5. Ado, A. B., Rashid, N. N. M., Adam, S. B., Nuhu, B. A., Salihu, H. S., & Masunda, T. (2024). Board characteristics and financial performance of listed deposit money banks in Nigeria. Gusau Journal of Accounting and Finance, 4(2), 1-17. DOI: 10.57233/gujaf.v4i2.1. [Google Scholar] [Crossref]

6. Adusei, M., & Elliott, C. (2015). Bank profitability: Insights from the rural banking industry in Ghana. Cogent Economics & Finance, 3(1), 1078270. DOI: 10.1080/23322039.2015.1078270. [Google Scholar] [Crossref]

7. Alagbe, E. A. & Yinus, S. O. (2025). Financial technology and financial performance: Experience from Nigeria deposit money banks. Asian Journal of Economics, Business and Accounting, 25(4), 112-122. https://doi.org/10.9734/ajeba/2025/v25i41737 [Google Scholar] [Crossref]

8. Almazari, A. A. (2013). Capital adequacy, cost income ratio and the performance of Saudi banks (2007–2011). International Journal of Academic Research in Accounting, Finance and Management Sciences, 3(4), 284–293. [Google Scholar] [Crossref]

9. Arend, R. J., & Bromiley, P. (2009). Assessing the dynamic capabilities view: Spare change, everyone? Strategic Organization, 7(1), 75-90. DOI: 10.1177/1476127008100132. [Google Scholar] [Crossref]

10. Ashiru, O., Balogun, G., & Paseda, O. (2023). Financial innovation and bank financial performance: Evidence from Nigerian deposit money banks. Research in Globalization, 6, 100120. DOI: 10.1016/j.resglo.2023.100120. [Google Scholar] [Crossref]

11. Baselga-Pascual, L. & Vähämaa, E. (2021). Female leadership and bank performance in Latin America. Emerging Markets Review, 48, Article 100807. [Google Scholar] [Crossref]

12. Central Bank of Nigeria. (2022). Payments System Vision 2025. No DOI. [Google Scholar] [Crossref]

13. Central Bank of Nigeria. (n.d.). e-Payment Statistics. No DOI. [Google Scholar] [Crossref]

14. Citterio, A., King, T. & Locatelli, R. (2024). Is digital transformation profitable for banks? Evidence from Europe. Finance Research Letters, 70, Article 106269. [Google Scholar] [Crossref]

15. David-West, O., Iheanachor, N., & Umukoro, I. (2020). Sustainable business models for the creation of mobile financial services in Nigeria. Journal of Innovation & Knowledge, 5(2), 105-116. DOI: 10.1016/j.jik.2019.03.001. [Google Scholar] [Crossref]

16. Ehret, M., & Olaniyan, R. (2023). Banking the unbanked. Constitutive rules and the institutionalization of mobile payment systems in Nigeria. Journal of Business Research, 163, 113845. DOI: 10.1016/j.jbusres.2023.113845. [Google Scholar] [Crossref]

17. Eisenhardt, K. M., & Martin, J. A. (2000). Dynamic capabilities: What are they? Strategic Management Journal, 21(10-11), 1105-1121. [Google Scholar] [Crossref]

18. DOI: 10.1002/1097-0266(200010/11)21:10/11<1105::AID-SMJ133>3.0.CO;2-E. [Google Scholar] [Crossref]

19. Enoruwa, K. O., Ezuem, D. M., & Nwani, C. O. (2019). Electronic channels and bank performance: Empirical evidence from Nigeria. SSRG International Journal of Economics and Management Studies, 6(5), 37-46. DOI: 10.14445/23939125/IJEMS-V6I5P107. [Google Scholar] [Crossref]

20. Ezie, O., Musa, I. C., & Joshua, J. D. (2023). Impact of electronic banking on deposit money banks performance in Nigeria: Evidence from dynamic ordinary least squares technique. Journal of Economics, Management and Trade, 29(10), 12-26. https://doi.org/10.9734/jemt/2023/v29i101137 [Google Scholar] [Crossref]

21. Forcadell, F. J., Aracil, E., & Ubeda, F. (2020). The impact of corporate sustainability and digitalization on international banks performance. Global Policy, 11(S1), 18-27. DOI: 10.1111/1758-5899.12761. [Google Scholar] [Crossref]

22. Gbanador, M. A., Makwe, E. U., & Olushola, O. A. (2026). Financial innovation and performance of deposit money banks in Nigeria. IIARD International Journal of Banking and Finance Research, 12(3), 69-82. https://doi.org/10.56201/ijbfr.vol.12.no3.2026.pg69.82 [Google Scholar] [Crossref]

23. Iheanachor, N., & Ozegbe, A. E. (2020). Dynamic linkages between mobile money and banks’ performance in Nigeria: An autoregressive distributed lag (ARDL) approach. International Journal of Management, Economics and Social Sciences, 9(3), 224-246. [Google Scholar] [Crossref]

24. https://doi.org/10.32327/IJMESS/9.3.2020.12 [Google Scholar] [Crossref]

25. Iyobo, E. B., & Shaba, M. (2025). Digital banking and the performance of deposit money banks in Nigeria. Journal of Business Development and Management Research, 9(7). [Google Scholar] [Crossref]

26. https://doi.org/10.70382/ajbdmr.v9i7.036 [Google Scholar] [Crossref]

27. John, N. J., Emmanuel, N. C., Ikechi, K. S., & Eke, C. K. (2020). Cashless policy and the Nigerian payment system. International Journal of Innovation and Economic Development, 5(6), 7-28. DOI: 10.18775/IJIED.1849-7551-7020.2015.56.2001. [Google Scholar] [Crossref]

28. Khando, K., Islam, M. S., & Gao, S. (2023). The emerging technologies of digital payments and associated challenges: A systematic literature review. Future Internet, 15(1), 21. DOI: [Google Scholar] [Crossref]

29. 3390/fi15010021. [Google Scholar] [Crossref]

30. Kolawole, K. D. (2025). Effect of electronic banking on performance of deposit money banks in Nigeria. Gusau Journal of Accounting and Finance, 6(3), 193-199. [Google Scholar] [Crossref]

31. https://doi.org/10.57233/gujaf.v6i3.15 [Google Scholar] [Crossref]

32. Lee, I., & Shin, Y. J. (2018). Fintech: Ecosystem, business models, investment decisions, and challenges. Business Horizons, 61(1), 35-46. [Google Scholar] [Crossref]

33. Madugba, J. U., Egbide, B.-C., Jossy, D. W., Agburuga, U. T., & Chibunna, O. C. (2021). Effect of electronic banking on financial performance of deposit money banks in Nigeria. Banks and Bank Systems, 16(3), 71-83. [Google Scholar] [Crossref]

34. Madugba, J. U., Egbide, B.-C., Jossy, D. W., Agburuga, U. T., & Chibunna, O. O. (2021). Effect of electronic banking on financial performance of deposit money banks in Nigeria. Banks and Bank Systems, 16(3), 71-83. [Google Scholar] [Crossref]

35. Mgbada, F. N., Ele, L. E., Uguru, L. C., & Tebepah, S. F. (2024). Effects of technological innovations on the financial performance of deposit money banks (DMBs) in Nigeria (2010-2021). IIARD International Journal of Economics and Business Management, 10(3), 64-79. [Google Scholar] [Crossref]

36. Monday, J. U., Dopemu, O. S., & Ademola, B. I. (2024). Financial innovation and financial performance of Nigerian listed deposit money banks: Evidence from panel data modeling. European Journal of Accounting, Auditing and Finance Research, 12(9), 32-52. [Google Scholar] [Crossref]

37. Money, U., & Iyoha, A.-O. I. (2025). Electronic banking channels and financial performance in the Nigerian banking industry. UMYU Journal of Accounting and Finance Research, 8(1), 193-209. [Google Scholar] [Crossref]

38. Mustapha, S. A. (2018). E-payment technology effect on bank performance in emerging economies: Evidence from Nigeria. Journal of Open Innovation: Technology, Market, and Complexity, 4(4), 43. DOI: 10.3390/joitmc4040043. [Google Scholar] [Crossref]

39. Nguyen-Thi-Huong, L., Nguyen-Viet, H., Nguyen-Phuong, A. & Nguyen, D. V. (2023). How does digital transformation impact bank performance? Cogent Economics & Finance, 11(1), Article 2217582. [Google Scholar] [Crossref]

40. Nwosu, K. C., & Ike-Elechi, O. (2023). Factors influencing continuous intention to use mobile payment platforms in Southeast, Nigeria. European Journal of Business and Innovation Research, 11(8), 43-75. DOI: 10.37745/ejbir.2013/vol11n84375. [Google Scholar] [Crossref]

41. Obi-Nwosu, V. O., Onuoha, O. C., & Okoye, N. J. (2021). Electronic banking and growth of deposit money banks operations: Nigeria experience. Asian Journal of Economics, Business and Accounting, 21(8), 124-135. DOI: 10.9734/AJEBA/2021/v21i830416. [Google Scholar] [Crossref]

42. Okoro, A. S., Ezike, I. B., Onah, A. O., & Onuzo, C. I. (2023). Dynamics of digitalisation and its implications on the Nigerian financial system performance. European Modern Studies Journal, 7(5). [Google Scholar] [Crossref]

43. Olarewaju, O. M., Olarewaju, O. O., Oladejo, T. M., & Migiro, S. O. (2017). Nexus of bank personnel and cost-income ratio (CIR) in Nigeria. Banks and Bank Systems, 12(4-1), 154–162. [Google Scholar] [Crossref]

44. Olofin, A. J., Yadua, J. C., Gambo, N., & Muhammad, R. A. (2024). Financial innovations and financial performance of listed deposit money banks in Nigeria. International Journal of Management Technology, 11(1), 51-67. [Google Scholar] [Crossref]

45. Ologunwa, O. P., Yusuf, R. A., & Obamuyi, T. M. (2024). Effect of financial technology on financial performance of deposit money banks in Southwest, Nigeria. International Journal of Research and Innovation in Social Science, 8(1), 1974-1986. [Google Scholar] [Crossref]

46. Omenukwa, M. O., & Gbalam, P. E. (2025). Electronic financial services and bank performance in Nigeria. International Journal of Social Sciences and Management Research, 11(6), 493-507. [Google Scholar] [Crossref]

47. Osuagwu, E. (2014). Determinants of bank profitability in Nigeria. International Journal of Economics and Finance, 6(12), 46-63. [Google Scholar] [Crossref]

48. Pazarbasioglu, C., Garcia Mora, A., Uttamchandani, M., Natarajan, H., Feyen, E., & Saal, M. (2020). Digital financial services. Washington, DC: World Bank Group. [Google Scholar] [Crossref]

49. Porfirio, J. A., Felicio, J. A., & Carrilho, T. (2024). Factors affecting digital transformation in banking. Journal of Business Research, 171, 114393. [Google Scholar] [Crossref]

50. Salami, S. O., Akande, F. I., & Alalade, Y. S. A. (2022). Determinants of technological innovation adoption and banking operations of selected deposit money banks in Nigeria. European Journal of Accounting, Auditing and Finance Research, 10(1), 25-54. [Google Scholar] [Crossref]

51. Shaibu, I., & Okafor, C. (2020). A statistical assessment of liquidity management and profitability in a cross section of deposit money banks in Nigeria using panel analysis. Archives of Business Research, 8(3), 173-190. [Google Scholar] [Crossref]

52. Shihadeh, F. (2021). Financial inclusion and banks performance: Evidence from Palestine. Investment Management and Financial Innovations, 18(1), 126-138. [Google Scholar] [Crossref]

53. Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509-533. [Google Scholar] [Crossref]

54. Vo, D. H., & Nguyen, N. T. (2021). Does financial inclusion improve bank performance in the Asian region? Asian-Pacific Economic Literature, 35(2), 123-135. DOI: 10.1111/apel.12330. [Google Scholar] [Crossref]

• The Role of Value and Growth Stocks in Portfolio Returns: Insights From the Nigerian Stock Market
• The Impact of Environmental, Social, Governance (ESG) and Profitability on Firm Value Moderated by Firm Size
• Assessment of the Impact of Environmental Operating Costs on Return on Assets: Evidence from Listed Breweries in Nigeria
• Mobile Money and Digital Financial Services Ecosystem in Adamawa State
• A Quantitative Approach of Professional Skepticism and Fraud Detection among Malaysian Internal Auditors