FINANCIAL TECHNOLOGY (FINTECH)AND CUSTOMER SATISFACTION IN NIGERIA. (A CASE STUDY OF OPAY)

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Globally, technology has permeated every facet of our lives, encompassing social interactions, education, commerce, and financial transactions.  Mobile devices and emerging technology enhance the accessibility and appeal of all transactions, making them more affordable. The Financial Stability Board classifies it as a "technology that fosters financial innovation, potentially impacting novel business models, applications, processes, or products that exert a substantial influence on financial markets, institutions, and the delivery of financial services." Fin-Tech has revolutionised the way people obtain financial services from both financial institutions and financial markets (Chong et al., 2019). Financial technology innovations such as Online Banking or Electronic Banking have enabled banks to offer rapid and time-saving services to their customers. As a result, electronic banking systems have become widely adopted by banks worldwide. (Mittal, 2019).

Fintech, short for financial technology, is a dynamic industry that aims to improve the efficiency and effectiveness of financial service delivery. This technology is creative and challenges traditional methods of delivering financial services (Saksonova, 2017). The financial services sector include a range of services provided by banks, accountancy firms, credit unions, insurance companies, consumer finance companies, and real estate agencies. These services are offered to both individual consumers and businesses (Philippon, 2019). The financial services industry is widely recognised as a crucial component for the efficient functioning of an economy worldwide. In developing nations like Nigeria, the growth and development of the economy are heavily influenced by the savings-investment cycle. This cycle involves the flow of funds from entities with excess savings to those with a deficit in spending.Pandey (2018) and Olowe (2019) assert that the primary function of the financial services sector is to facilitate the efficient circulation of transferred funds. This is achieved through the use of financial intermediaries such as finance houses, banks, and savings institutions, which ensure the smooth flow of money within the system. 

Currently, it is noteworthy that banks and financial technology (fin-tech) enterprises are engaged in competition in both developed countries and emerging markets (Omankhanlen et al., 2020). The Nigerian financial services business has undergone a substantial and noteworthy transition over the past few decades, with technology advancements playing a pivotal role in its evolution. The financial technology (fintech) firms have significantly impacted the sector with their innovative products and services, which involve the integration of digital technology in all stages of the customer's journey (Okoh, 2020). The proper functioning of fintech and the advancement of financial service delivery have been facilitated by several key variables, including savings, investment, technology, and human resources (Saksonova and Kuzmina-Merlino, 2017).

Kyari, et al., (2021) said that numerous Fintech companies have adopted and utilised cutting-edge technologies, like peer-to-peer payment technology, peer-to-peer lending, mobile banking, digital wallets, and blockchain, for financial services. Agbelusi (2018) confirmed this and listed "cyber security, big data, data analytics, and distributed ledger application to new asset classes and processes" as financial services offered by Fintech. Bunea, et al., (2017) asserts that Fintech companies are facilitating the provision of banking services, including payment processing, investment management, and asset administration. Kyari & Akinwale (2020), referencing Cornad (2000), elucidate the manner in which Fintech companies administer their financial operations through the utilisation of crowdfunding and crowd lending. They assert that Fintech entities offer financial services to both individuals and organisations through various means, including crowdfunding and crowd lending. Crowdfunding involves Fintech facilities that enable direct lending between individuals or corporations, whereas crowd lending utilises Fintech platforms to connect businesses in need of money with investors who are willing to lend funds directly to them. This eliminates all marketing expenses that users typically bear when engaging consultants and other support entities” (Kyari & Akinwale, 2020).

Fintech companies must possess a profound comprehension of financial services in order to provide these services or develop products for users. Fintech companies can leverage this knowledge to enhance their product innovation and streamline the delivery of financial services through the strategic use of technology. Blakstad & Allen (2018) recognised that numerous Fintech firms are providing digital payment options that enable payments both within the conventional banking payment system and beyond it. According to Kyari et al. (2021), Fintech is emerging as a direct competitor to traditional banks by gradually offering all the banking services that were previously exclusive to traditional banks.

Nigeria, with its substantial population and fast expanding internet access, offers a conducive environment for the development of FinTech innovation. Traditional banking services have frequently faced limitations due to infrastructure obstacles, exorbitant operational expenses, and a lack of inclusiveness, especially for individuals who are unbanked or underbanked (Chinedu, 2019). Opay, along with other FinTech companies, has intervened to fill these gaps by offering financial services that are easier to obtain, more inexpensive, and more user-friendly. Opay, which was introduced in 2018, has rapidly emerged as a notable FinTech service provider in Nigeria. Opay, first established as a mobile payment platform, has broadened its range of services to encompass ride-hailing, food delivery, and a diverse array of financial services, including savings and loans (Daniel, 2023). The platform's success may be ascribed to its pioneering methodology, user-focused design, and capacity to cater to the distinct requirements of the Nigerian market. Customer satisfaction in the field of Financial Technology (FinTech) is impacted by several elements, including as the level of user-friendliness, availability, security measures, cost efficiency, and quality of customer assistance (Marvel, 2022). Ensuring exceptional customer satisfaction is crucial for FinTech firms such as Opay, as it directly impacts client retention, positive word-of-mouth, and overall business expansion. This study aims to assess the impact of Financial Technology (FinTech) on customer satisfaction in Nigeria. An analysis of Opay.

1.2 Statement of the problem

The swift advancement of Financial Technology (FinTech) has fundamentally altered the worldwide and Nigerian financial services industry. FinTech solutions offer enhanced accessibility, efficiency, and convenience in comparison to conventional banking systems. Opay is a prominent player in Nigeria's FinTech sector, providing a wide range of services including mobile payments, transportation, food delivery, and financial services. Although there is a widespread availability of FinTech services, there are still notable obstacles that impact consumer satisfaction and, as a result, the acceptance and long-term viability of these services.

Financial technology endeavours to offer easily navigable financial solutions, yet there are apprehensions surrounding the practical availability and usability of its services among various customer groups (Ikott, 2023). The crucial factor lies in the degree to which Opay's interface and functionality cater to the requirements of all user groups, encompassing the unbanked and underbanked populations. Challenges such as intricate navigation, language obstacles, and varying levels of digital literacy can impede the achievement of ideal user experiences and satisfaction (Daniel, 2023). According to Chris (2021), ensuring the dependability and protection of FinTech services is crucial for establishing client confidence and contentment. Opay users have experienced problems including transaction failures, extended processing times, and intermittent system downtimes. Furthermore, user confidence and happiness can be greatly affected by security problems such as data breaches, fraud, and unauthorised access (Marvel, 2022).

Furthermore, the provision of efficient customer service and timely resolution of problems are crucial elements in ensuring customer satisfaction (Agege, 2019). Insufficient customer service, sluggish response times, and poor problem resolution can result in user dissatisfaction and attrition (Martin et al., 2020). Assessing the efficiency and efficacy of Opay's customer support services is essential for comprehending its influence on customer satisfaction. The cost-effectiveness of FinTech services, encompassing transaction fees and related expenses, significantly impacts consumer satisfaction. The presence of exorbitant expenses or undisclosed fees can discourage users from fully adopting these services (Marvel, 2022). Analyse the impact of Opay's price structure on customer satisfaction and usage patterns to pinpoint areas that need improvement.

In past studies, banks have mostly examined overall customer satisfaction. However, this research especially focusses on consumer satisfaction connected to the usage of Financial technology, specifically Opay. No research has been undertaken explicitly on the influence of Fin-tech on customer satisfaction in Nigeria. This research introduces the factors of Transactions Efficiency, service security, Ease of Use, and performance for the first time, in order to examine their influence on customer satisfaction. Therefore, the necessity for this investigation arises.

Objectives of the study

The primary objective of this study is to critically assess financial technology (Fintech)and customer satisfaction in Nigeria. (A Case Study of Opay). Specific objectives of this study are to:

To assess the various services offered by Opay in Nigeria

To assess the level of customer satisfaction with Opay's financial services

To identify the key factors (such as ease of use, transaction speed, reliability, customer support, and security measures) that influence customer satisfaction in the context of FinTech services in Nigeria

To examine the challenges faced by Opay users and how these impact their overall satisfaction.

To provide recommendations for improving customer satisfaction in FinTech services, specifically for Opay.

1.4 Research Questions

The following research questions which are in line with the objectives of this study will be answered in this study:

What are various services offered by Opay in Nigeria?

What is the level of customer satisfaction with Opay's financial services?

What is the factors that influence customer satisfaction in the context of FinTech services in Nigeria?

What are the challenges faced by Opay users and how do these challenges impact their overall satisfaction?

What are the recommendations for improving customer satisfaction in FinTech services, specifically for Opay?

1.5 Research Hypotheses

To determine the effectiveness of this study, the following research null hypotheses will be formulated to guide the study and it will be tested at 0.05% levels of significance.:

Ho: There are no significant factors that influence customer satisfaction in the context of FinTech services in Nigeria.

Ha: There are significant factors that influence customer satisfaction in the context of FinTech services in Nigeri.

1.6 Significance of the study

An examination of FinTech and consumer satisfaction in Nigeria, namely through a case study of Opay, holds great importance due to its potential impact on financial inclusion, economic growth, business tactics, regulatory structures, academic discussions, and socioeconomic empowerment. The statement highlights the significant impact that FinTech may have on promoting inclusive economic growth and enhancing the quality of financial services for both individuals and businesses in Nigeria. The study will be highly significant for the general public, as well as for policymakers, students, and scholars.

Opay, a FinTech platform, plays a vital role in improving financial inclusion in Nigeria. They provide easily accessible and user-friendly financial services, such as mobile payments, savings, and transfers, to meet the needs of underserved groups who may lack convenient access to conventional banking services. Assessing client satisfaction with these services might reveal the extent to which FinTech platforms are effectively contributing to the objectives of financial inclusion. Customer satisfaction has a direct impact on the business success and sustainability of FinTech companies such as Opay. An examination of the aspects that influence customer satisfaction, such as service quality, simplicity of use, security, and reliability, yields significant evidence for improving business strategies, boosting service offerings, and retaining loyal customers in a competitive market.

Moreover, enhanced availability of financial services can foster economic expansion by enabling individuals and small enterprises to engage more actively in the official economy. Increased customer satisfaction with FinTech platforms can serve as an indicator of their efficacy in expediting transactions, minimising expenses, and enhancing overall financial efficiency for users in Nigeria.

Moreover, the results can provide valuable insights to policymakers and regulators regarding the influence of FinTech on consumer well-being and market dynamics in Nigeria. This comprehension can direct the creation of regulatory frameworks that promote innovation, safeguard consumers, and encourage fair competition in the FinTech industry.

Additionally, this study enhances academic literature by presenting empirical proof about customer happiness in the context of FinTech adoption in emerging markets such as Nigeria. This study contributes to the existing information on the factors that affect user acceptance of digital financial services. It also provides valuable comparative insights by examining global trends in the use of financial technology (FinTech).

1.7 Scope of the study

The primary objective of this study is to critically assess financial technology (Fintech)and customer satisfaction in Nigeria. (A Case Study of Opay). Specific objectives of this study are to:

To assess the various services offered by Opay in Nigeria

To assess the level of customer satisfaction with Opay's financial services

To identify the key factors (such as ease of use, transaction speed, reliability, customer support, and security measures) that influence customer satisfaction in the context of FinTech services in Nigeria

To examine the challenges faced by Opay users and how these impact their overall satisfaction.

To provide recommendations for improving customer satisfaction in FinTech services, specifically for Opay.

Broadly, this study focus is to critically assess financial technology (Fintech)and customer satisfaction in Nigeria. Specifically, this study seeks to assess the various services offered by financial technology in Nigeria, assess the level of customer satisfaction with Fintech services and identify the key factors (such as ease of use, transaction speed, reliability, customer support, and security measures) that influence customer satisfaction in the context of FinTech services in Nigeria. 

Further, this study will focus on examine the challenges faced by Fintech users and how these impact their overall satisfaction and it also seeks to provide recommendations for improving customer satisfaction in FinTech services in Nigeria.

 The study is carried out in Nigeria. 

1.8 Limitations of the study

Like in any human attempt, the researchers encountered several small limits during the investigation. The primary constraint was the dearth of comprehensive literature on the topic, given the scarcity of data pertaining to financial technology (Fintech)and customer satisfaction in Nigeria. (A Case Study of Opay). Therefore, a substantial investment of time and effort was required to identify the suitable materials, books, or information and to collect data. 

Moreover, this study is limited by its diminutive sample size and restricted geographical range, concentrating just on Nigeria. Hence, the findings of this study cannot be extrapolated, thereby necessitating additional research. 

Furthermore, the researcher's restraints were predominantly attributable to financial limitations, as they are a student without a means of revenue to support themselves. The research location's high transportation costs, impacted by current inflation in Nigeria, made it difficult to afford transportation fees.

In addition, the researcher encountered a time limitation as a result of the necessity to do this research while simultaneously meeting the responsibilities of attending lectures and engaging in other educational pursuits.

1.9 Definition of terms

Financial technology: Financial technology (better known as fintech) is used to describe new technology that seeks to improve and automate the delivery and use of financial services. ​​​At its core, fintech is utilized to help companies, business owners, and consumers better manage their financial operations, processes, and lives.

Customer satisfaction: Customer satisfaction (CSAT) is a measure of how well a company's products and services meet customers' expectations. It reflects your business' health by showing how well your products are resonating with buyers