Financial Technology and Performance of Deposit Money Banks in Sub Saharan Africa

Résumé

The rapid evolution of financial technology is reshaping global banking, particularly in developing economies like Sub-Sahara Africa. Despite rising adoption of digital banking channels, such as Mobile banking, internet banking, and Mobile Money, Deposit Money Banks continue to experience uneven profitability, especially regarding interest -related income. This study investigates the impact of financial technology (FinTech) adoption on the performance of deposit money banks (DMBs) across twenty Sub-Saharan African countries from 2014 to 2023. Motivated by persistent concerns over low profitability indicators like Net Interest Margin (NIM) despite the widespread growth of digital banking tools, the study addresses gaps in existing literature that often rely on traditional metrics (ROA, ROE) and overlook the distinct roles of Net Interest Margin (NIM). Recognizing the need to account for country-level heterogeneity and macroeconomic volatility, the study applies the Random Effects panel regression model with robust standard errors. The empirical results reveal that internet banking (β=0.4253, p=0.000), mobile banking (β=0.1093, p=0.017), and mobile money (β=0.1413, p=0.000) have significant positive effects on NIM, suggesting these channels enhance banks’ income from core intermediation. Conversely, ATM usage (β=0.1099, p=0.527) and POS transactions (β=–0.0044, p=0.885) show insignificant effects. Inflation (β=–0.0048, p=0.006) has a significant negative effect, confirming its adverse impact on banks’ margins. The study concludes that FinTech tools particularly internet and mobile-based platforms substantially strengthen banks’ profitability by improving efficiency and market reach, whereas ATMs and POS remain less impactful. It recommends that banks deepen investments in mobile and internet banking technologies and that regulators enhance digital infrastructure, cybersecurity, and consumer protection frameworks to maximize FinTech’s benefits and mitigate inflationary pressures on bank performance.