Digital transformation and internal control effectiveness of fintech-intensive firms in Nigeria

Transformation of The Digital revolution has brought about a significant change in the working of financial institutions, especially those who perform intensive fintech work related to IT technologies and are heavily dependent on digital technologies as their medium of service delivery and financial reporting. However, in spite of the rapid increase in the development of fintech in Nigeria, there are worries about the effectiveness of internal control systems on ensuring compliance and reliable financial reporting in the digital oriented environments. This study examined the relationship between digital transformation and internal control effectiveness in the fintech intense firms in Nigeria. Specifically, the study examined the psychological and demographic factors of digital strategy and leadership support; process digitalization; and digital skills or digital culture on compliance and reliability in reporting. The study was based on technology acceptance model, resource-based view theory and institutional theory. A cross-sectional research design was adopted and the research philosophy that directed this study was the positivist research philosophy. The population of the study consisted of 390 employees and managerial personnels of fintech intensive firms in Nigeria of which, a sample size of 378 respondents was selected using purposive sampling techniques. Primary data were obtained on the basis of a structured questionnaire prepared on a Likert scale. The data were analyzed in using descriptive statistics and rank correlation coefficient of spearman at level 0.01. The results showed that digital strategy and leadership support, process digitalization and digital skills or culture all have positive and significant relationships with compliance and reporting trustworthiness. The study concluded that digital transformation facilitates the effectiveness of the internal control system in fintech-intensive institutions. Based on the findings, the study recommends that fintech firms improve leadership commitment to digital initiatives, invest in process automation, and build the digital competency of employees to improve compliance and reliability of reporting. The study adds to the knowledge by presenting empirical evidence on the role of digital transformation in enhancing the effectiveness of internal control in the fintech-intensive firms in Nigeria.