1.1       Background of the study

In Nigeria, financial service delivery is gradually merging with developing technologies, resulting in the already well-known ‘financial technology.’ Fintech did not exist a few years ago, or there was a significant gap between the supply of financial services and technological advances. However, things have changed in the financial market, and almost every entrepreneur is talking about Fintech. Technology adoption is not new in the financial industry, but until recently, the operating environment was constrained by a number of factors. Since the late twentieth century, when most financial services were dematerialized, the business has been highly computerized. As a result, for payments and onboarding for new products and services, only actual currency or a check were typically required.

In-person or paper-based processes were frequently required for services. Nonetheless, physical infrastructure such as branches and automated teller machines were required to reach out to and communicate with clients on a regular basis ( Mackenzie, A. 2015).

The early twenty-first century can be defined as the era of the integration of new financial technologies into banking life, which fundamentally altered all old banking technology and business procedures, necessitating urgent financial system upgrades.

The new term FinTech arose from the synergistic combination of information technologies and technologies for the provision of financial and banking services, which radically altered the global financial system’s architecture.

According to T. Puschmann (2017), some of the world’s largest audit and consulting firms, including Ernst & Young and PwC, see financial inclusion as a priority.

Fintech refers to the use of innovative technologies in the provision of financial and banking services by companies that are typically startups competing with traditional institutions (banks).

According to him, FinTech is a rapidly growing industry at the intersection of the financial services and technology industries, in which technology entrepreneurs and new market participants apply creative ideas to goods and services traditionally provided by the traditional banking services sector. Interestingly, as FinTech businesses have evolved, numerous governments around the world have recognized the need for a cashless economy, resulting in the creation of digital currencies. Digital currencies have piqued people’s interest and have the potential to be widely used in payment transactions. Digital currencies (also referred to as digital money)

According to Gilbert, Scott, and Loi, Hio, money, electronic money, or electronic currency), whether privately or publicly issued, are a type of cash available in digital form (2018). Examples include virtual currencies, cryptocurrencies, and central bank digital currencies (CBDC). According to the article, digital money can be centralized, with a single point of control over the money supply, or decentralized, with control over the money supply coming from multiple sources. Governments and central banks around the world are closely monitoring digital currency developments and assessing their implications for the economy, financial system, and central banks.

International economies have begun to transition from paper to digital money, taking advantage of rapid technological advancement and financial market growth.

Nigeria is not far behind. Emmanuel O. (2021) stated in his study that central banks around the world have been delicately working on their digital currency by gradually weaning themselves off rapidly declining cash payments, which is why the Central Bank of Nigeria joined the fray so that Nigeria does not fall behind, which led to the launch of her e-Naira, which comes after instructing banks to close cryptocurrency and crypto-related accounts in February 2021. ( However, the implications of digital currency acceptance as a payment method have yet to be defined, particularly in terms of how it would affect the operations and scope of Fintech businesses.

1.2 Problem description

Digital currencies, particularly those with a built-in decentralized payment system based on the use of blockchain technology,

A distributed ledger is a disruptive technology that has the potential to have a wide-ranging impact on financial markets and the economy. This was confirmed when Gai, Qiu, Sun, and Zhao (2017) stated that the implications could include possible disruption to company models and systems, as well as promoting new economic exchanges and connections. Fintech companies are known for making financial services more accessible to the general public by providing standard financial activities such as saving, investing, and loan processing, all of which are susceptible to monetary changes or inventions.

According to Abdulkareem (2021), many reasons have been advanced as to why the Central Bank of Nigeria is considering the issuance of its own digital currency, ranging from a reduction in the cost of managing the currency.

Paper currency, the use of new emerging digital technologies, an improved digital readiness landscape, maturing identification registries, and driving financial inclusion are all examples of initiatives. However, none of these reasons have taken into account the implications of this new development on FinTech, because

According to Kalu (2021), the CBN established e-Naira to provide secure, cheap, and quick local and international financial services. However, its qualities and attributes are similar to those of a few fintech companies’ products and services, which has contributed to their high client patronage. As a result, the new e-naira development may pose a significant risk to their commercial operations as well as the continued existence of fintech firms. Will both rural and urban Nigerians adopt e-Naira?

Do urban consumers influence the relevance of fintech businesses in Nigeria? Will it broaden their range of services? Will it help them make more money, or will it just be another product on their long list? To answer these questions, the researcher had to investigate the e-naira and its implications for the fintech industry.

1.3 Purpose of the research

The study’s overarching goal is to investigate the impact of the e-naira on the financial technology sector. The study specifically seeks to:

1. Determine whether the introduction of e-Naira will broaden the scope of financial services provided by the FinTech sector.

2. Determine whether the introduction of e-Naira will increase the profitability of FinTech firms.

3. Determine whether or not public acceptance of

e-Naira will endanger the survival of FinTech startups because the e-Naira platform will provide services that are closely related to what they do.

1.4 Hypotheses for research

HO1: The launch of eNaira has no significant impact on the business operations of Nigerian FinTech companies.

HO2: Public acceptance of e-Naira will jeopardize the survival and profitability of Nigerian FinTech startups.

1.5 Importance of the research

The study’s findings will be useful to economic developers, policymakers, the FinTech sector, and the general public. The study’s findings will enlighten policymakers and economic developers on the need to focus more on this new development in order to help the general public gain clarity and clear their doubts about e-Naira. The study’s findings have implications for FinTech companies.

will allow them to prepare for the challenges that will accompany the launch of e-Naira and find a way to mitigate them in order to remain relevant in the changing financial economy. Finally, the study’s findings will contribute to the existing body of literature and serve as a reference tool for both scholars and students interested in conducting additional research in a related field.

1.6 The scope of the research

The scope of this study is limited to the impact of the e-naira on the financial technology sector. The study will look into whether the launch and adoption of e-naira will pose a significant threat to the operation and profitability of Nigerian FinTech companies. However, the study is restricted to Flutterwave in Lagos State.

1.7 The study’s limitations

The researchers encountered minor constraints while conducting the study, as with any human endeavor. The significant constraint was the scarcity of literature on the subject because it is a new discourse, so the researcher incurred more financial expenses and spent more time sourcing for relevant materials, literature, or information and in the data collection process, which is why the researcher resorted to a limited sample size. Furthermore, the researcher will conduct this study alongside other academic work. Despite the constraints, all of these constraints were minimized in order to provide the best.

1.8 Definitions of Terms

FinTech: Fintech refers to the incorporation of technology into financial services companies’ offerings in order to improve their usability.

and consumer delivery.

Digital currencies are monies that exist only as electronic data and do not exist in physical form, but perform the basic functions of money such as unit of account, store of value, and means of exchange.

eNaira: The name given to the CBN’s first proposed digital currency is eNaira. The eNaira is a central bank digital currency (CBDC) issued as legal tender by the Central Bank of Nigeria. It is the digital equivalent of the Naira and will be used in the same way as cash.



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