Technological innovations, bank liquidity and performance in Nigeria

Abstract

The Diffusion of Innovative theory by Rogers (1962) is adopted to examine the relationship that exist between technological innovations, bank liquidity and performance in Nigeria from 2009Q1 – 2020Q4. Secondary data on bank liquidity, bank performance, mobile pay, web pay; instant payments, automated teller machines, and point of sale were secured from the
Central Bank of Nigeria statistical database. Robust estimation methods that include VAR and VECM models are used to determine how bank liquidity affect technological innovations and their overall performance. Findings show that though banks’ digital innovations are accepted by customers, it is not frequently used. Also, the unavailability of funds in the short term hinders technological innovations. Overall, mobile pay, web pay, point of sale and instant payment significantly promote bank performance. The study thus recommends that in order to address illiquidity, banks should support customers with new customized products to help mobilize deposits and also explore long term financing for their technological innovations so as to remain competitive. They should also review their credit policies from time to time to make for on-time and flexible repayment of loans and advances. To ensure universal use of these digital platforms, banks should engage in more awareness programs,
and maintain constant communication on ways to help in the use of these platforms. Furthermore, is the safety of their digital platforms by maintaining high safety standards in their security infrastructure; identify and manage ‘Single Points of Failures’ as well as give up-to-date information to their customers on how to remain safe.