Research Purpose: This paper empirically studies the effect of information technology (IT) on the performance of Deposit Money Banks (DMBs) in Nigeria. Specifically, it examines the impact of electronic payment platforms, including automated teller machine (ATM) transactions, point of sales (POS) payment systems, web payments, and mobile payment systems on the annual profit of DMBs.
Methodology: An ex-post-facto research design was adopted, covering a 14-year period from 2009 to 2022. Data were collected from the World Bank Database, Central Bank of Nigeria (CBN) Statistical Bulletin, and audited annual reports of the sampled banks. The data were analysed using statistical tools such as panel least squares, stationarity, and cointegration tests.
Findings: The results indicated that while the cumulative impact of the regressors on the dependent variable was significant (t-statistic = Wald chi2 = 14.46; p-value = 0.0249 < 0.05), the individual effects were largely non-significant. However, three variables showed strong individual effects:
These findings suggest that while the overall influence of IT on the performance of DMBs is significant, certain aspects of IT, particularly ATM transactions and e-payment volumes, play a crucial role.
Conclusion: The study concludes that the use of information technology in Deposit Money Banks is beneficial and should be encouraged. The significant impact of ATM transactions and e-payment volumes on profitability highlights the importance of these platforms in enhancing bank performance.
Recommendations: It is recommended that DMBs continue to invest in and promote the use of electronic payment platforms to maximise their positive impact on profitability. Additionally, further research should be conducted to explore other potential IT-related factors that could influence bank performance.
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