CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The banking sector has undergone significant transformation due to the rapid
advancement of financial technology (FinTech). FinTech refers to the application of
digital innovations such as mobile banking, internet banking, artificial intelligence,
blockchain, and electronic payment systems to enhance the delivery of financial services.
These technologies have significantly improved operational efficiency, reduced
transaction costs, enhanced customer experience, and expanded financial inclusion across
both developed and developing economies (Hassan et al., 2025). The growing relevance
of FinTech reflects its ability to disrupt traditional financial intermediation and redefine
the structure and competitiveness of the global financial system.
Across the global financial landscape, FinTech adoption has accelerated rapidly, driven
by increased digitalization, changing customer expectations, and the need for cost-
effective service delivery. Financial institutions have integrated advanced technologies
such as big data analytics and artificial intelligence into their operations to improve risk
management, fraud detection, and decision-making processes. Empirical evidence
indicates that FinTech plays a significant role in improving financial inclusion,
particularly in emerging markets where access to conventional banking services is limited
(Hassan et al., 2025). However, despite these benefits, concerns persist regarding
cybersecurity threats, regulatory uncertainties, technological complexity, and operational
risks associated with digital financial systems (Saha et al., 2025). These challenges raise
critical questions about the sustainability and effectiveness of FinTech investments in the
banking sector.
The adoption and development of FinTech have also been particularly pronounced in
Asia, where countries such as China, India, and Singapore have emerged as global
leaders in digital financial innovation. The region has benefited from strong regulatory
support, high mobile and internet penetration, and collaborative ecosystems involving
governments, financial institutions, and technology firms. Mobile payment systems and
digital lending platforms have transformed financial transactions and enhanced financial
deepening in these economies. Nevertheless, issues such as data privacy concerns,
regulatory fragmentation, and systemic risks continue to challenge the long-term
sustainability of FinTech growth in the region (Lee & Shin, 2018).
In Africa, FinTech has emerged as a critical driver of financial inclusion, especially in
addressing the challenges posed by limited access to traditional banking services. The
widespread adoption of mobile banking and digital payment platforms has significantly
improved access to financial services, particularly among unbanked and underbanked
populations. Studies have shown that FinTech contributes positively to financial
inclusion and economic participation in Sub-Saharan Africa (Kamara & Yu, 2024). The
sector has also attracted substantial global investment, positioning Africa as an emerging
hub for digital financial innovation. However, the growth of FinTech in Africa is
constrained by infrastructural deficiencies, low levels of digital literacy, weak regulatory
frameworks, and increasing cybersecurity risks. These limitations suggest that
technological adoption alone is insufficient and must be complemented by strong
institutional and governance frameworks.
Nigeria, as one of the largest economies in Africa, has emerged as a major FinTech hub,
driven by its large population, increasing mobile penetration, and expanding digital
economy. Deposit Money Banks (DMBs) in Nigeria have actively adopted various
FinTech solutions, including mobile banking applications, USSD services, internet
banking platforms, and electronic payment systems, to enhance service delivery and
remain competitive. The adoption of these technologies is largely motivated by the need
to improve efficiency, increase accessibility, and address the limitations of traditional
banking systems (McKinsey & Company, 2020). Nigeria also accounts for a significant
share of FinTech investments in Africa, reflecting its strategic importance in the
continent’s financial ecosystem (Fintech Global, 2023).
Despite the rapid adoption of FinTech in Nigeria, several operational challenges persist.
These include system downtime, transaction failures, and increasing incidences of
electronic fraud, which raise concerns about the effectiveness and reliability of digital
financial systems. Evidence suggests that while FinTech has the potential to enhance
financial inclusion, its impact is often constrained by low financial literacy, inadequate
infrastructure, and weak cybersecurity systems (Sam-Abugu et al., 2025). These
challenges indicate that beyond technological adoption, internal organizational factors
such as governance structures and strategic decision-making play a critical role in
determining the success of FinTech investments.
Ownership structure is a fundamental aspect of corporate governance that influences
strategic decisions, including investments in innovation and technology. It refers to the
distribution of equity among different categories of shareholders, such as institutional
investors, foreign investors, managerial stakeholders, and large block shareholders.
Ownership structure affects corporate decision-making through mechanisms of
monitoring, control, and alignment of managerial interests, as explained by agency theory
and resource dependence theory (Jensen & Meckling, 1976; Pfeffer & Salancik, 1978).
In addition to traditional ownership categories, emerging dimensions such as pension
fund ownership and ownership stability have gained increasing attention in corporate
governance literature. Pension funds, as long-term institutional investors, are often
associated with stable and sustainable investment strategies. Similarly, ownership
stability, which reflects the continuity of major shareholders over time, may influence
long-term strategic decisions, including investments in FinTech.
However, despite the growing importance of FinTech in the banking sector, there is
limited empirical evidence on how both traditional and emerging ownership structures
influence FinTech investment in Nigerian banks. Furthermore, the role of board
technological expertise—defined as the ability of board members to understand and
support digital innovation—remains underexplored in this relationship. Board
technological expertise may enhance strategic oversight and improve the effectiveness of
technology-driven investments.
Therefore, this study examines the effect of ownership structure on FinTech investment
in Nigerian Deposit Money Banks, with particular emphasis on the moderating role of
board technological expertise.
1.2 Statement of the Problem
Deposit Money Banks in Nigeria have widely adopted FinTech solutions; however, the
effectiveness of these investments remains uncertain. Although banks have introduced
various digital banking platforms, they continue to experience system failures, transaction
delays, and cybersecurity breaches.
Evidence from the Nigeria Inter-Bank Settlement System indicates persistent electronic
fraud within digital payment systems, highlighting weaknesses in the implementation and
management of FinTech solutions. In addition, high infrastructure costs, limited technical
expertise, and integration challenges with legacy systems continue to constrain effective
digital transformation in the Nigerian banking sector.
Existing studies have extensively examined the relationship between ownership structure
and corporate outcomes such as profitability, dividend policy, and firm performance.
However, limited attention has been given to FinTech investment as a strategic outcome
variable. Moreover, most prior studies have focused predominantly on traditional
ownership variables, while neglecting emerging dimensions such as pension fund
ownership and ownership stability.
Furthermore, although ownership structure may influence strategic investment decisions,
the effectiveness of such decisions may depend on the technological competence of the
board. Board technological expertise can enhance oversight, improve strategic alignment,
and support digital innovation initiatives. However, empirical evidence on the moderating
role of board technological expertise in the relationship between ownership structure and
FinTech investment remains scarce, particularly within the Nigerian context.
1.3 Objectives of the Study
The main objective of this study is to examine the effect of ownership structure on
FinTech investment among listed Deposit Money Banks in Nigeria, with the moderating
effect of board technological expertise.
OThe specific objectives are to:
i. Examine the effect of institutional ownership on FinTech investment.
ii. Assess the effect of foreign ownership on FinTech investment.
iii. Determine the effect of managerial ownership on FinTech investment.
iv. Evaluate the effect of ownership concentration on FinTech investment.
v. Examine the effect of pension fund ownership on FinTech investment.
vi. Assess the effect of ownership stability on FinTech investment.
vii. Examine the moderating effect of board technological expertise on the
relationship between ownership structure and FinTech investment.
viii. Examine the moderating effect of board technological expertise on the
relationship between institutional ownership and FinTech investment.
ix. Assess the moderating effect of board technological expertise on the
relationship between foreign ownership and FinTech investment.
x. Determine the moderating effect of board technological expertise on
the relationship between managerial ownership and FinTech
investment.
xi. Evaluate the moderating effect of board technological expertise on the
relationship between ownership concentration and FinTech investment.
xii. Examine the moderating effect of board technological expertise on the
relationship between pension fund ownership and FinTech investment.
xiii. Assess the moderating effect of board technological expertise on the
relationship between ownership stability and FinTech investment.
1.4 Research Questions
The study seeks to answer the following questions:
i. What is the effect of institutional ownership on FinTech investment?
ii. How does foreign ownership influence FinTech investment?
iii. What is the effect of managerial ownership on FinTech investment?
iv. How does ownership concentration affect FinTech investment?
v. What is the effect of pension fund ownership on FinTech investment?
vi. How does ownership stability influence FinTech investment?
vii. Does board technological expertise moderate the relationship between
ownership structure and FinTech investment?
viii. To what extent does board technological expertise moderate the relationship
between institutional ownership and FinTech investment?
ix. How does board technological expertise moderate the relationship between
foreign ownership and FinTech investment?
x. What is the moderating effect of board technological expertise on managerial
ownership and FinTech investment?
xi. How does board technological expertise moderate the relationship between
ownership concentration and FinTech investment?
xii. To what extent does board technological expertise moderate the relationship
between pension fund ownership and FinTech investment?
xiii. How does board technological expertise moderate the relationship between
ownership stability and FinTech investment?
1.5 Research Hypotheses
H01: Institutional ownership has no significant effect on FinTech investment.
H02: Foreign ownership has no significant effect on FinTech investment.
H03: Managerial ownership has no significant effect on FinTech investment.
H04: Ownership concentration has no significant effect on FinTech investment.
H05: Pension fund ownership has no significant effect on FinTech investment.
H06: Ownership stability has no significant effect on FinTech investment.
H07: Board technological expertise has no significant moderating effect on the
relationship between institutional ownership and FinTech investment.
H08: Board technological expertise has no significant moderating effect on the
relationship between foreign ownership and FinTech investment.
H09: Board technological expertise has no significant moderating effect on the
relationship between managerial ownership and FinTech investment.
H10: Board technological expertise has no significant moderating effect on the
relationship between ownership concentration and FinTech investment.
H11: Board technological expertise has no significant moderating effect on the
relationship between pension fund ownership and FinTech investment.
H12: Board technological expertise has no significant moderating effect on the
relationship between ownership stability and FinTech investment.
1.6 Significance of the Study
This study is important from academic, policy, managerial, and investment perspectives,
as it provides a better understanding of how ownership structure influences FinTech
investment in the Nigerian banking sector.
This study contributes to existing literature on corporate governance and financial
innovation by extending the discussion beyond traditional ownership variables such as
institutional, foreign, and managerial ownership. It introduces additional variables like
pension fund ownership and ownership stability, which are becoming increasingly
relevant in modern governance studies. In addition, the study examines the moderating
effect of board technological expertise, which has received limited attention in prior
research. By doing so, it helps to explain how board capabilities can influence the
relationship between ownership structure and FinTech investment. The study also
provides evidence from Nigeria, thereby adding to the limited research on governance
and FinTech in developing economies.
The findings of this study are useful for regulatory authorities, particularly the Central
Bank of Nigeria, in developing policies that support effective digital banking systems. By
showing how ownership structure and board expertise affect FinTech investment, the
study provides evidence that can guide improvements in corporate governance
frameworks within the banking sector. It may also support policies aimed at
strengthening board composition, improving oversight, and ensuring that banks are better
prepared for digital transformation.
For bank management, this study provides practical insights into how governance
structures influence investment decisions in financial technology. It highlights the
importance of having a balanced ownership structure and a board with adequate
technological knowledge. The study suggests that strong governance can improve
decision-making, reduce conflicts of interest, and support better investment in digital
technologies. This can help banks improve efficiency, service delivery, and
competitiveness in a rapidly changing financial environment.
This study also benefits investors by providing a clearer understanding of how ownership
structure and board expertise affect FinTech investment decisions. It shows how different
types of shareholders may influence a bank’s approach to innovation and long-term
growth. The inclusion of variables such as pension fund ownership and ownership
stability is particularly useful for long-term investors who are interested in sustainable
performance. Overall, the study helps investors make more informed decisions by
considering governance factors that affect technological investment and competitiveness.
✅ 1.2 Statement of the Problem (Defense-Ready, 250
Words)
Deposit Money Banks in Nigeria have increasingly invested in financial technology in order to
improve service delivery, enhance operational efficiency, and remain competitive in the evolving
digital financial environment. These investments include mobile banking platforms, USSD
services, internet banking, and electronic payment systems. However, despite the rising level of
FinTech investment, the expected improvements in banking performance have not been fully
achieved.
In practice, Nigerian banks continue to experience frequent system downtimes, transaction
failures, network instability, and increasing cases of electronic fraud. These challenges have
negatively affected customer satisfaction and reduced trust in digital banking services. This
creates a practical concern that increased FinTech investment does not automatically translate
into improved service quality or operational effectiveness.
This situation suggests that internal governance factors may play a critical role in determining
how FinTech investments are made and managed. One key factor is ownership structure, which
influences strategic decision-making, monitoring intensity, and risk preferences within banks.
Through these mechanisms, ownership structure is expected to affect the level and direction of
FinTech investment.
However, existing empirical studies in Nigeria have mainly focused on ownership structure and
general firm performance, with limited attention to FinTech investment outcomes. In addition,
emerging ownership dimensions such as pension fund ownership and ownership stability remain
underexplored in relation to digital investment decisions. Furthermore, the moderating role of
board technological expertise has not been sufficiently examined, despite its importance in
guiding technology-related strategies in modern banking.
Therefore, the problem addressed in this study is the lack of empirical evidence on how
ownership structure influences FinTech investment in Nigerian Deposit Money Banks, and how
this relationship is conditioned by board technological expertise.