DIGITAL INNOVATION ON MARKET EXPANSION IN THE FINANCIAL SECTOR: A STUDY OF FINTECH END-USERS IN LAGOS STATE, NIGERIA

Abstract

This study investigated the impact of digital innovation on market expansion in the financial sector, focusing on Fintech end-users in Lagos State, Nigeria. Despite the rapid growth of fintech services in Nigeria, fintech end-users still face challenges relating to financial exclusion, fraud risk, high transaction costs, limited transparency, and transaction inefficiency. Guided by the Technology Acceptance Model and Diffusion of Innovation Theory, the study examines how customer digital engagement, regulatory technology use, blockchain technology adoption, AI and automation implementation, and real-time payment infrastructure improve financial inclusion, fraud detection, cost reduction, transparency, and operational efficiency among fintech end-users in Lagos State. Four hundred (400) copies of a structured questionnaire were shared electronically to fintech end-users in Lagos State, including active customers, merchants, and agents of OPay, Moniepoint, Internopay, and related platforms. 384 valid responses were received and analysed with Partial Least Squares Structural Equation Modelling using SmartPLS. The major findings of this study revealed that five dimensions of digital innovation (customer digital engagement, RegTech acceptance, blockchain adoption, AI and automation adoption, and real-time payment infrastructure) positively and significantly affect indicators of financial market expansion (fraud detection, cost reduction, transparency, and operational efficiency) in the Fintech sector. The study concluded that investing in user-centred platforms such as automated compliance, blockchain-enabled verification, explainable AI, and resilient instant-payment rails drives financial market expansion and results in operational efficiency of the Fintech firms; hence, the study recommended that Fintech firms should invest more in automated fraud monitoring systems, identity verification tools, and anti-money laundering technologies to enhance fraud detection and improve users’ trust in digital financial platform.