Digital Banking Adoption, Financial Inclusion, and Economic Development Among Youths and Business Owners in Lagos, Nigeria

Article Sidebar

PDF
Published: 2026-08-14
DOI: https://doi.org/10.58806/ijsed.2026.v2i8n01
Keywords:
Banking Digitalisation; Financial Inclusion; Digital Literacy; Mobile Banking; Economic Development

Main Article Content

Dr. UNACHUKWU Nnamdi Felix
Department of Business Administration, Universidad Católica San Antonio De Murcia, Murcia, Spain
Dr. NWAUWA Linus Onyeka Ezealaji
Department of Agricultural Economics, University of Ibadan, Ibadan, Nigeria

Abstract

The digitalisation of the banking sector represents one of the most consequential technological shifts in the Nigerian financial landscape. Despite the recognised potential of digital banking to accelerate financial inclusion and catalyse broader economic development, significant barriers persist. Inadequate digital literacy, infrastructural deficiencies, cybersecurity vulnerabilities, and systemic poverty are prominent. This study investigates the drivers of and resistance to digital banking adoption among youth and business owners in Lagos, Nigeria. It examines the implications of banking digitalisation for financial inclusion and national economic development.

A quantitative, cross-sectional research design was employed, utilising a structured questionnaire administered to 181 respondents drawn from tertiary institution students and mobile-phone traders at Saka Tinubu Market, Victoria Island, Lagos. Data were analysed using IBM SPSS, incorporating descriptive statistics, normality tests (Kolmogorov-Smirnov), ordinal regression analysis, and Spearman non-parametric correlation.


The results indicate that Improved Online Banking (IOB) infrastructure is a statistically significant positive predictor of customers opting for digital banking (OOB), whilst reluctance to adopt online banking (ROB) exerts a significant negative influence. The Spearman correlation coefficients for ROB and IOB with OOB were -0.168 and 0.159, respectively. Ordinal regression further revealed that IOB increased the odds of digital banking adoption by a factor of 2.983, whilst ROB reduced the odds by a factor of 0.523.


The findings underscore the necessity for Nigerian banks, financial regulators, and policymakers to invest strategically in digital infrastructure enhancement, customer-centred cybersecurity, and structured digital literacy programmes. Strengthened digital banking adoption holds significant promise for increasing financial inclusion and stimulating economic growth.

Article Details

Issue

Vol. 2 No. 8 (2026): Volume 02, Issue 08, 2026

Section

Articles

References

1) Achuonye, K. A. (2012). Digitising Nigerian education: Issues, challenges and prospects. International Journal of Academic Research in Business and Social Sciences, 2(4), 214–221.

2) Adeoye, B. F. (2017). Information and communication technology and disruption across sectors. Journal of Information Technology Impact, 17(1), 1–14.

3) Ahmed, T., & Monir, A. (2018). Financial technology in banking industry: Challenges and opportunities. Paper presented at the International Conference on Economics and Administrative Sciences (ICEAS).

4) Akpansung, A., & Babalola, S. (2011). Banking sector credit and economic growth in Nigeria: An empirical investigation. CBN Journal of Applied Statistics, 2(2), 51–62.

5) Ameh, A., et al. (2019). Digital inclusiveness and community development in Nigeria. Journal of African Development Studies, 6(1), 34–49.

6) Anichebe, U. (2019). How regulations can define the future of FinTech in Nigeria. FinTech Policy Brief, Lagos.

7) Ayadi, R., Arbak, E., & De Groen, W. P. (2008). Banking sector reform and financial intermediation in Mediterranean partner countries. MEDPRO Technical Report.

8) Boriseukov, O., Gukalenko, O., & Pustorvoitov, V. (2021). Digital transformation of banking: Conceptual foundations and implementation strategies. Journal of Banking Innovation, 9(2), 45–59.

9) Bouyon, S. (2018). Cost and value in banks: A model fit for the digital era? ECRI Research Report No. 20. European Credit Research Institute.

10) Bruce, C., & Peyton, J. (1999). Digital literacy and information skills. Journal of Information Science Education, 10(1), 29–41.

11) Celent. (2015). IT spending in banking: A global perspective. Boston: Celent.

12) Central Bank of Nigeria. (2019). Financial regulations and monetary policy brief. Abuja: Central Bank of Nigeria.

13) Chen, Z., Zhu, H., & Guo, Q. (2016). Research on mobile internet banking organisational innovation. Outstanding Paper, 14th International Academic Conference on Financial Systems Engineering and Risk Management (FSERM), Harbin.

14) Cuesta, C., Ruesta, M., Tuesta, D., & Urbiola, P. (2015). The digital transformation of the banking industry. BBVA Research Digital Economy Outlook.

15) Curran, J. M., & Meuter, M. L. (2005). Self-service technology adoption: Comparing three technologies. Journal of Services Marketing, 19(2), 103–113.

16) Daries, N., et al. (2002). Digital literacy: Technical skills and electronic device usage. Journal of Educational Technology Research, 4(3), 17–30.

17) De Locastro, S., Ashmen, R., Swarey, P., & Makarand, V. (2014). Positioning for the digital banking ecosystem. McKinsey Banking Practice Report.

18) Deng, L. (2010). Online banking purposes and user motivations. International Journal of Human-Computer Interaction, 26(8), 789–807.

19) Ding, X. D., Huang, Y., & Verma, R. (2011). Customer experience in online financial services: A study of behavioural intentions for techno-ready market segments. Journal of Service Management, 22(3), 344–366.

20) Effiom, L., & Edet, S. E. (2020). Financial innovation and the performance of small and medium scale enterprises in Nigeria. Journal of Small Business and Entrepreneurship. https://doi.org/10.1080/08276331.2020.1789872

21) Eshet-Alkahai, Y. (2002). Digital literacy: A conceptual framework for survival skills in the digital era. Journal of Educational Multimedia and Hypermedia, 13(1), 93–106.

22) Forrester. (2015). Banking of the future: How banks will use digital capabilities to remain competitive. Cambridge, MA: Forrester Research.

23) Garg, R., Rahman, Z., & Qureshi, M. N. (2014). Measuring customer experience in banks: Scale development and validation. Journal of Modelling in Management, 9(1), 87–117.

24) Gartner. (2018). IT glossary: Digitalisation. Stamford, CT: Gartner. Retrieved from https://www.gartner.com/it-glossary/digitalization

25) Gilster, P. (1997). Digital literacy. New York: Wiley.

26) Gomber, P., Koch, J. A., & Siering, M. (2017). Digital finance and FinTech: Current research and future research directions. Journal of Business Economics, 67(5), 537–580.

27) Hornuf, L., Klus, M. F., Lohwasser, T. S., & Schwienbacher, A. (2020). How do banks interact with FinTech startups? Small Business Economics. https://doi.org/10.1007/s11187-020-00359-3

28) Hyde-Clarke, N. (2013). Mobile technology and economic empowerment among poor urban communities in South Africa. African Communication Research, 6(2), 143–164.

29) Imahe, O. J. (2005). Banking sector development and economic growth in Nigeria. Nigerian Journal of Monetary Economics, 3(1), 1–18.

30) Imhanyeor, R. (2013). Visionary leadership and digital transformation in Nigerian schools. Journal of Educational Leadership in Africa, 2(1), 55–71.

31) Imhanyeor, R. (2021). Digital literacy: Concept, dimensions and contemporary applications. Journal of Information and Communication Studies, 12(4), 1–18.

32) International Telecommunication Union (ITU). (2019). Digital inclusion: Empowering all. Geneva: ITU. Retrieved from https://www.itu.int/en/ITU-D/Digital-inclusion

33) Izogo, E. E., Jayawardhena, C., & Adegbola, E. A. (2018). Creating particularised trust in e-retailers through experiential value and generalised trust. Journal of Strategic Marketing. https://doi.org/10.1080/0965254X.2018.1482944

34) Izogo, E. E., Jayawardhena, C., & Kalu, A. O. U. (2018). Examining customers' experience with the Nigerian Bank Verification Number (BVN) policy from the perspective of dual-lens theory. International Journal of Emerging Markets, 13(4), 709–730.

35) King, R. G., & Levine, R. (1993). Finance and growth: Schumpeter might be right. Quarterly Journal of Economics, 108(3), 717–737.

36) Krishana, D., Khin, A. A., Teng, K. L. L., & Chinna, K. (2016). Consumers' perceived interactivity and intention to use mobile banking in structural equation modelling. International Review of Management and Marketing, 6(4), 883–890.

37) Lauret, F. (2018). Digital inclusion and the economics of left-behind populations. OECD Digital Economy Papers, No. 271. Paris: OECD Publishing.

38) Liebana-Cabanillas, F., Munoz-Leiva, F., & Rejon-Guardia, F. (2013). The determinants of satisfaction with e-banking. Industrial Management & Data Systems, 113(5), 750–767.

39) Lines, B. (2016). How FinTech is shaping financial services: PwC global FinTech report. London: PricewaterhouseCoopers.

40) Manyika, J., Lund, S., Bughin, J., Woetzel, J., Stamenov, K., & Dhingra, D. (2016). Digital globalisation: The new era of global flows. McKinsey Global Institute Report. San Francisco: McKinsey & Company.

41) Marous, J. (2019). Digital transformation starts from the inside out. The Financial Brand. Retrieved from https://thefinancialbrand.com/79589/digital-banking-trends-transformation/

42) McKinnon, R. I. (1973). Money and capital in economic development. Washington, DC: Brookings Institution.

43) Middleton, F. (2022). Reliability vs validity in research: Differences, types and examples. Scribbr. Retrieved from https://www.scribbr.com/methodology/reliability-vs-validity

44) Muluka, K. O. H. (2015). Influence of digital banking on customer satisfaction: A case of National Bank of Kenya, Bungoma County (Master's dissertation). University of Nairobi.

45) Nigerian Communications Commission (NCC). (2021). Industry statistics: Subscriber/network data. Abuja: NCC.

46) Nowa, A., et al. (2014). Generational preferences in mobile and internet banking. Journal of Financial Services Research, 12(2), 44–59.

47) Nuryakin, C., et al. (2017). Digital financial services and economic development in Indonesia: Evidence from Bank Indonesia's LKD programme. Bulletin of Monetary Economics and Banking, 20(1), 1–24.

48) Okello-Obura, C., & Magara, E. (2008). Information literacy and primary education: Building foundations for a digital society. African Journal of Library and Information Science, 18(1), 1–12.

49) Ondiege, P. (2010). Mobile banking in Africa: Taking the bank to the people. Africa Economic Brief, 1(8), 1–14.

50) Ozili, P. K. (2020). Financial inclusion in Nigeria: Determinants, challenges and achievements. In New challenges for future sustainability and wellbeing (Emerald Studies in Finance, Insurance, and Risk Management). Bingley: Emerald Publishing Limited.

51) Prior, D., et al. (2016). Digital skills for Nigeria: Meeting the 2030 sustainable development agenda. Development in Practice, 26(4), 467–479.

52) Raj, A. (2015). Mobile money and rural financial inclusion in India: Lessons from the field. Journal of Financial Inclusion, 3(1), 14–29.

53) Rogers, E. M. (1983). Diffusion of innovations (3rd ed.). New York: Free Press.

54) Rose, S., Clark, M., & Hair, N. (2012). Online customer experience in e-retailing: An empirical model of antecedents and outcomes. Journal of Retailing, 88(2), 308–322.

55) Saunders, M., & Lewis, P. (2012). Doing research in business and management: An essential guide to planning your project. Harlow: Pearson Educational Limited.

56) Saunders, M., Lewis, P., & Thornhill, A. (2007). Research methods for business students (4th ed.). Harlow: Financial Times Prentice Hall.

57) Schoemaker, D., et al. (2014). Banking sector payment systems and economic facilitation. Journal of Banking and Finance, 38(1), 122–136.

58) Schumpeter, J. A. (1952). The theory of economic development. Cambridge, MA: Harvard University Press.

59) Shaw, E. S. (1973). Financial deepening in economic development. New York: Oxford University Press.

60) Skan, J., Dickerson, J., & Masood, S. (2015). The future of FinTech and banking: Digitally disrupted or reimagined. London: Accenture.

61) Smith, A. (2018). The 10 best emerging FinTech startups in 2018. Retrieved from https://www.scoop.it/topic/best-online-business-magazine-by-adamsmith162/

62) Suprun, A., Petrishina, T., & Vasylchuk, I. (2020). Competition and cooperation between FinTech companies and traditional financial institutions. E3S Web of Conferences, 166, 13028.

63) Thakor, A. V. (2020). FinTech and banking: What do we know? Journal of Financial Intermediation, 41, 100833.

64) The Lancet Child & Adolescent Health. (2019). Growing up in a digital world: Benefits and risks. The Lancet Child & Adolescent Health, 3(3), 133.

65) Wayne, T., Soetan, T., Bajepade, G., & Mogaji, E. (Eds.). (2020). Technologies for financial inclusion in Nigeria. Research Agenda Working Papers.

66) Worku, G., Tilahun, A., & Tafa, M. A. (2016). The impact of electronic banking on customers' satisfaction in Ethiopian banking industry. Journal of Business and Financial Affairs, 5(2). https://doi.org/10.4172/2167-0234.1000174

67) Yoon, C. (2010). Antecedents of customer satisfaction with online banking in China: The effects of experience. Computers in Human Behaviour, 26(6), 1296–1304.