Challenges of Financial Technology (FINTECH) Innovations of Small Enterprises in South-West, Nigeria

Abstract

This study investigated the challenges affecting the adoption of financial technology (fintech) innovations among small enterprises in Southwestern Nigeria, with a focus on three critical factors: regulatory barriers, technological infrastructure, and financial literacy. The primary objective was to understand how these factors influence fintech adoption among small businesses and to identify potential strategies for enhancing financial inclusion and supporting SME growth. A quantitative research design was utilized, with data collected from a sample of 350 small enterprises across key urban centers in Ekiti, Lagos, Ogun, Ondo, Osun, and Oyo states. The sample size was determined using the Taro Yamane formula and stratified and simple random sampling techniques ensured representative data collection. The study formulated and tested three hypotheses aligned with the research objectives, using statistical analyses, including ANOVA, to evaluate the relationships between regulatory, infrastructural, and educational factors and fintech adoption. The findings reveal that regulatory barrier, such as complex compliance requirements and high costs, present significant obstacles to fintech adoption among SMEs. Furthermore, insufficient technological infrastructure, particularly in terms of reliable internet connectivity and stable electricity supply, limits access to fintech services. Financial literacy was also found to play an essential role, as SMEs with higher levels of digital financial understanding demonstrated greater fintech adoption rates. These results underscore the importance of targeted interventions: simplifying regulatory processes, enhancing infrastructure, and developing financial literacy programs to promote fintech engagement among SMEs. Such initiatives could foster financial inclusion, enhance SME productivity, and contribute to regional economic development. Future research is recommended to explore fintech adoption patterns across specific industries and investigate the impact of socio-cultural factors on digital financial engagement among SMEs.

Keywords: Fintech, Small Enterprises, Financial Inclusion