Digital Financial Services and Performance of Deposit Money Banks in Nigeria

Abstract

This study evaluates the impact of digital financial services on customer retention in Nigerian deposit money banks, with a focus on mobile banking, internet banking, Point of Sale (POS) terminals, and Automated Teller Machines (ATMs). The study was conducted in Lagos and Abuja, Nigeria, using a stratified random sampling technique to select 350 respondents from five top-ranked deposit money banks. Data were collected through structured questionnaires and analyzed using multiple regression to determine the relationship between digital financial services and customer retention. The findings reveal that mobile banking has the most significant effect on customer retention (β = 0.558, p < 0.001), followed by POS terminals (β = 0.365, p < 0.001). Internet banking (β = 0.089, p < 0.001) and ATMs (β = 0.065, p = 0.001) also contribute positively, though to a lesser extent. Collectively, these variables account for 83.7% of the variation in customer retention (R² = 0.837). The study concludes that digital financial services are critical to sustaining customer loyalty in Nigeria's banking sector. Key recommendations include prioritizing investments in robust digital infrastructure, improving system reliability, and enhancing customer support and education. Policymakers are encouraged to collaborate with banks to promote financial inclusion and innovation, ensuring the sustained growth of digital financial services.