E-naira and It’s Implications on the Fintech Sector




1.1       Background of the study

Financial service delivery is progressively merging with developing technologies in Nigeria, resulting in the already well-known ‘financial technology.’ Fintech was not a thing a few years ago, or rather, there was a significant gap between the supply of financial services and technological advancements. However, things are done differently in the financial market nowadays, and practically every entrepreneur is talking about Fintech. In the financial industry, technology adoption is not new, 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 characterized by a high degree of computerization. As a result, only actual currency or a check were typically necessary for payments, and onboarding for new products and services frequently required in-person or paper-based processes. Even yet, physical infrastructure including as branches and automated teller machines were essential to reach and communicate with clients on a regular basis ( Mackenzie, A. 2015).

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

The creation of the new word FinTech arose from the synergistic coupling of information technologies and technologies for the provision of financial and banking services, which radically modified the architecture of the global financial system.

According to T. Puschmann (2017), some of the world’s largest audit and consulting firms, such as Ernst & Young and PwC, see financial technologies (fintech) as a special term denoting the use of innovative technologies in the provision of financial and banking services by companies that are typically startups competing with traditional institutions (banks).

FinTech, he said, is a rapidly growing industry at the confluence of the financial services and technology industries, in which technology entrepreneurs and new market participants apply creative ideas to goods and services traditionally supplied by the traditional banking services sector. Interestingly, as FinTech businesses have evolved, the necessity for a cashless economy has been recognized by numerous governments throughout the world, resulting in the creation of digital currencies. Digital currencies have sparked a lot of curiosity and have the potential to become extensively used in payment transactions. Digital currencies (also known as digital money, electronic money, or electronic currency), whether privately or publicly issued, are a sort of cash available in digital form, according to Gilbert, Scott, and Loi, Hio. (2018). Virtual currencies, cryptocurrencies, and central bank digital currencies are examples (CBDC). The article goes on to say that digital money can be centralized, with a single point of control over the money supply, or decentralized, with power over the money supply coming from a variety of places. Around the world, governments and central banks are keeping a careful eye on advances in digital currencies and assessing their implications for the economy, financial system, and central banks.

Taking advantage of fast technical advancement and financial market growth, international economies have begun to transition from paper to digital money, with Nigeria not far behind. In his study, Emmanuel O. (2021) stated that about 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 is not left 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. (premiumtimesng.com). However, the ramifications of digital currency acceptance as a payment method have yet to be defined, particularly in terms of how it would effect Fintech businesses’ operations and scope.

1.2 Statement of the problem

Digital currencies, particularly those with an inbuilt decentralized payment system based on the usage of a distributed ledger, are a disruptive technology that might have a broad range of effects on financial markets and the economy. When Gai, Qiu, Sun, and Zhao (2017) indicated that the implications might include possible disruption to company models and systems, as well as promoting new economic exchanges and connections, this was confirmed. Fintech firms are recognized for making financial services more accessible to the general public by delivering typical financial activities like as saving, investing, and loan processing, all of which are vulnerable to monetary changes or inventions.

Many reasons have been put forward as to why the Central Bank of Nigeria is exploring the issuance of its own digital currency, according to Abdulkareem (2021), ranging from a reduction in the cost of managing paper currency, leverage of new emerging digital technologies, improved digital readiness landscape, maturing identification registries, and driving financial inclusion. However, none of those reasons has considered the implications of this new development on FinTech, due to the fact that

According to Kalu (2021), e-Naira was established to provide secure, cheap, and quick local and international financial services, as claimed by the CBN. However, its qualities and attributes are similar to those of a few fintech companies’ products and services, which has been a driving force for their high patronage by their clients. As a result, the new e-naira development may represent a significant danger to their commercial operations as well as the existence of fintech organizations. Will the adoption of e-Naira by both rural and urban consumers have an impact on the relevance of fintech businesses in Nigeria? Will it broaden their service offerings? Will it help them make more money or will it just add to their long list of products? In order to address these questions, the researcher had to look into the e-naira and its consequences for the fintech industry.

1.3       Objective of the study

The broad objective of this study is to examine the implication of e-naira on financial technology sector. Specifically, the study seeks to:

  1. Examine if the launching of e-Naira will widen the scope of the financial services rendered by FinTech Sector.
  2. Investigate if the launching of e-Naira will enhance the profitability of FinTech companies.
  3. Determine if the public acceptance of e-Naira will threaten the survival of FinTech Startups since the e-Naira platform will offer closely related services as they do.

1.4       Research hypotheses

HO1: There is no significant implication of eNaira launching on the business operation of FinTech Companies in Nigeria.

HO2: Public acceptance of e-Naira will threaten the survival and profitability of FinTech Startups in Nigeria.

1.5       Significance of the study

Findings from the study will be relevant to economic developers, policy makers, FinTech sector and  public users. To policy makers and economic developers, the result of the study will enlighten them on the need to throw more on this new development in other help the general public gain clarity and clear their doubts about e-Naira. To FinTech companies, the result of the study will enable them to brace up to the challenges that will accompany the  launch of e-Naira and find a way to downplay it in other to remain relevant in the changing financial economy. Finally findings from the study will add to the existing body of literature and serve as reference tool for both scholars and student who wishes to conduct further studies in related field.

1.6       Scope of the study

The scope of this study borders on the implication of e-naira on financial technology sector. The study will examine if the launching and adoption of e-naira will pose any significant threat to the operation and profitability of FinTech companies in Nigeria. The study is however delimited Flutterwave in Lagos State.

1.7       Limitation of the study

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. The significant constraint was the scanty literature on the subject owing that it is a new discourse thus the researcher incurred more financial expenses and much time was required in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. Additionally, the researcher will simultaneously engage in this study with other academic work. However in spite of the constraint all these constraint were downplayed to give the best.

1.8       Definition of Terms

FinTech: Fintech refers to the integration of technology into offerings by financial services companies in order to improve their use and delivery to consumers.

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

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



Abdulkareem M. (2021) Businesses in Nigeria must accept e-Naira – CBN retrived fromhttps://www.premiumtimesng.com/news/more-news/486095-businesses-in-nigeria-must-accept-e-naira-cbn.html

Ezuwore- O., Eyisi A., Emengini S., & Alio F.(2014) A Critical Analysis of Cashless Banking Policy in Nigeria. IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume 16, Issue 5. Ver. V (May. 2014), PP 30-42www.iosrjournals.org

 Gai, K., Qiu, M., Sun, X., Zhao, H. (2017). Security and privacy issues: A survey on fintech. Lecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics), 10135 LNCS, pp. 236-247.

Gilbert, Scott & Loi, Hio. (2018). Digital Currency Risk. International Journal of Economics and Finance. 10. 108. 10.5539/ijef.v10n2p108.

Kalu Aja (2021) All you need to know about the e-Naira set to be launched on October 1 retrived from https://nairametrics.com

Mackenzie, A. (2015). The fintech revolution. London Business School Review, 26 (3), pp. 50-53.

Premium Time: https://www.premiumtimesng.com/news/more-news/486095-businesses-in-nigeria-must-accept-e-naira-cbn.html

 Puschmann, T. (2017). Fintech. Business and Information Systems Engineering, 59 (1), pp. 69-76.



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