Financial literacy as a moderator in the nexus between fintech adoption and financial inclusion

Abstract

World Bank reports indicate that over half of the global adult population remains excluded from formal financial services, with the challenge being most pronounced in less developed economies where about 60% lack access to basic financial facilities. In Nigeria, although 64% of adults reportedly use banking services, the remaining 36% who are financially excluded remain a significant concern. Previous studies on the link between financial technology (FinTech) and financial inclusion have yielded mixed results, with evidence suggesting that financial literacy may play a moderating role in this relationship. This study examines the moderating effect of financial literacy on the relationship between financial technology and financial inclusion in Nigeria. Data were collected from 302 respondents out of 1,460 registered SMEs in the Federal Capital Territory (FCT), Abuja. Descriptive and
correlation analyses were conducted, followed by structural equation modeling using Smart PLS for deeper insights. The results reveal that both financial technology and financial literacy significantly enhance financial inclusion among SME owners, with financial literacy further strengthening the impact of FinTech on inclusion. Based on these findings, the study recommends that policymakers and financial institutions design FinTech solutions tailored to the needs of SMEs while implementing financial literacy initiatives. Such measures will ensure that entrepreneurs maximize the benefits of digital financial innovations and contribute to inclusive financial participation.