Digital Transformation and Operational Efficiency in Fintech SMEs: A Study of Start-Ups in Yaba Tech Hub, Lagos, Nigeria

Abstract

Digital transformation is increasingly adopted and recognised as important for the seamless growth of SMEs in Nigeria. Numerous firms in the FinTech segment of the financial services sector face challenges in achieving sustainable operational efficiency. The study examines how digital transformation influences the operational efficiency of FinTech SMEs. It employed cloud computing, automation, artificial intelligence (AI), and digital marketing to measure the digital transformation. A cross-sectional survey design was employed, with a structured questionnaire used to collect data. The population comprises 171 employees of three FinTech firms: Kuda, Paga, and Advansio. The sample size was 120. The sample size was obtained using a multistage sampling technique (Stratified and simple random sampling), because the population was divided into strata, and each stratum was represented before administering the questionnaire. Data were analysed using descriptive statistics and factor analysis. Multiple regression and Pearson correlation analyses were utilised to test hypotheses. The results revealed high adoption levels across all four dimensions, indicating strong awareness of technology-driven operations. However, the correlation analysis showed no statistically significant relationships between any of the dimensions and operational efficiency (p > 0.05). Regression analysis further confirmed the results, with an R² of 0.005, indicating that only 0.5% of the variation in operational efficiency could be explained by the combined influence of the four dimensions. Indicating that digital transformation has no significant effect on the operational efficiency of FinTech SMEs. The findings reflect transitional challenges, such as fragmented system integration, inadequate training, and varying levels of adoption maturity. Finally, the findings reveal that digital transformation remains a vital enabler of long-term competitiveness. The study recommends that strategic alignment, continuous digital upskilling, integration of environmental context, and stronger leadership commitment should be adopted by FinTech SMEs