Digital Disruption in the Banking and Financial Sector: Creating a Sustainable Framework for the Future of Banking in Nigeria

Abstract

The first few months in 2023 was a season of untold hardship for many Nigerians, in light of the Central Bank of Nigeria (CBN)’s redesign and withdrawal limit policy which led to cash scarcity. As a result, many Nigerians were forced to rely heavily on internet and mobile banking services. Data from the Nigeria Interbank Settlement System (NIBSS) indicates that the naira scarcity increased reliance on mobile devices for financial transactions by 505.29% in the first quarter of 2023. This finding comes as no surprise when considering the data that already existed even before the naira scarcity. A good example is the McKinsey survey on retail banking in Africa, which reported that 59% of Nigerian customers prefer digital banking channels, while only 15% favour physical structures. With the rise and rise of digital transformation, many traditional banks in the country now struggle to keep up their game and compete with popular Fintech startups like Opay and Kuda. It is against this backdrop that this paper examines the regulatory framework for digital banking, the challenges of digital disruption in the Nigerian banking and financial sector, and the strategies for creating a sustainable framework to ensure the future resilience and growth of the industry. Abstract Body]

Keywords: Digital Disruption, Banking Sector, Financial Services, Legal Framework, Nigeria