FINTECH AND TRADITIONAL BANKING IN NIGERIA: ANALYSING COMPETITION, COLLABORATION, AND SYSTEMIC RISK

Abstract

This conceptual paper examines the relationship between financial technology (fintech) firms and traditional banking institutions in Nigeria, with particular attention to competition, collaboration, and systemic risk. The study synthesises extant literature to develop a comprehensive understanding of how technological innovation in financial services is transforming established banking structures. It further highlights emerging regulatory challenges and the implications of these developments for financial stability and inclusion. Drawing on Innovation Diffusion Theory, Disruptive Innovation Theory, and Financial Intermediation Theory, the paper analyses the technological, institutional, and policy factors shaping Nigeria’s financial ecosystem. The findings suggest that the interaction between fintech firms and traditional banks represents a dual development. While fintech enhances financial inclusion, efficiency, and innovation, traditional banks provide institutional credibility, regulatory experience, and systemic stability. Effective regulatory policy must therefore balance the promotion of innovation with the preservation of financial system stability.