1.1 Background to the Study

One of the major concerns of economic development programs in emerging countries is the issue of financial inclusion, which means the ability of people to access and use affordable financial services including saving, lending, insuring and other kinds of financial transactions. It mainly involves those groups who are usually out of reach of traditional banking systems (Central Bank of Nigeria, 2026).

SMEs are very important for the economy of Nigeria and their contribution can not be overlooked. Many SMEs in Nigeria find it difficult to access formal sources of finance because of high collateral and poor credit history (Adeleke & Yusuf, 2025). This makes the use of informal sources of financial transactions very common among many SMEs in the country.

The establishment of FinTech firms has changed the financial sector in Nigeria in several ways. The use of FinTech companies entails the employment of technologies like digitization, mobile applications, cloud computing, and data analytics in delivering services like digital payments, P2P lending, mobile banking, and microinvestments. Such developments have helped in improving access to financial services for SMEs especially in rural and poorly-served areas (Ojo & Nwankwo, 2026).

Innovations like mobile money solutions, digital lending, and payment gateways have ensured reduction in cost, improvement in speed of transactions, and provision of access to finance by small enterprises. Despite these developments, issues of cyber security, lack of clarity regarding regulatory aspects, digital illiteracy, and technological constraints hinder the effectiveness of financial innovations in ensuring financial inclusion for Nigerian SMEs (Okafor et al., 2026).

As such, comprehending the impact of FinTech companies in boosting financial inclusion for SMEs in Nigeria is important for sustainable economic growth and development.

1.2 Statement of the Problem

However, despite the increasing number of FinTech firms in the country, there is a large percentage of SMEs that experience financial exclusion in Nigeria. Most of them continue to encounter challenges in accessing loans, online payment channels, and other financial products that would help them grow further.

While some of the technological products created have provided alternatives to traditional banking products for the SME sector, they lack adequate knowledge and skills needed to effectively use these new opportunities, among others. Moreover, the prohibitive cost of financing in some online platforms makes most SMEs skeptical about fully adopting FinTech products (Adeleke & Yusuf, 2025). Furthermore, infrastructural barriers like internet connectivity problems, low levels of smartphone ownership in rural regions, and regulatory barriers also impede the advancement of financial inclusion using FinTech. Thus, the disparity between financially included and financially excluded SMEs is still considerable in Nigeria.

The problem of the study is therefore centered on investigating how FinTech companies facilitate financial inclusion for SMEs in Nigeria and what the challenges faced by them are.

1.3 Objectives of the Study

The primary purpose of this research is to look into the importance of FinTech firms in increasing financial inclusion among the SMEs in Nigeria.

The specific purposes include:

1.       analyzing the extent of FinTech utilization by the SMEs in Nigeria;

2.       evaluating the impact of FinTech services on the availability of financial credits;

3.       assessing the effects of FinTech on the growth and performance of SMEs;

4.       determining the problems that hinder financial inclusion via FinTech services.

1.4 Research Questions

The research will be based on the following questions:

1. What is the level of FinTech uptake by SMEs in Nigeria?

2. How does the use of FinTech services affect SMEs’ access to credit facilities?

3. What effects does the use of FinTech services have on SMEs' growth?

4. What are the difficulties hindering the efficiency of FinTech services in enhancing financial inclusion?

1.5 Significance of the Study

The significance of this study lies in several areas. Firstly, it adds to literature on financial inclusion and digital finance, especially as regards the application of FinTech in emerging markets.

Secondly, the results of this study will benefit SME entrepreneurs in the process of using the potential of FinTech companies and their ability to provide access to finance and manage financial services.

Thirdly, it is relevant for policymakers, such as the Central Bank of Nigeria, as well as for financial regulators who may apply the outcomes of the research to creating better policies and fostering a more inclusive financial system. At the same time, FinTech companies may apply the results to increasing efficiency and usability of their products.

Fourthly, this study is helpful to researchers.

1.6 Scope of the Study

The scope of this study is to investigate how the involvement of FinTech firms could facilitate financial inclusion of SMEs in Nigeria. Specifically, the research will concentrate on the relationship between selected SMEs that operate in the urban and semi-urban settings and FinTech firms including digital payment systems, mobile lending applications, online banking, etc. The research will not include corporate organizations..

1.7 Conceptual Clarification

FinTech Companies: Businesses which offer financial services through digital means such as lending, savings, payment processing, and investment.

Financial Inclusion: Use and access to low-cost financial services by everyone.

SMEs (Small and Medium-Sized Enterprises): Enterprises which operate with restricted finances and labor force and play a key role in development.

Online Lending: Lending of money through digital platforms such as mobile apps without the assistance of banks.

Payment Gateway: Technology which makes online transactions possible between the buyer and seller.

1.8 Theoretical Framework

The proposed study is based on the Diffusion of Innovation Theory, a theory that examines the process through which innovations diffuse over time in the social systems. Rogers (2003) notes that innovation adoption can be attributed to relative advantage, compatibility, complexity, trialability, and observability. With regard to FinTech, SMEs will adopt innovations that offer advantages, are compatible, are less complex, are trialable, and observable.

Further, this research will draw its inspiration from the Financial Intermediation Theory, which focuses on the important role played by financial institutions in lowering transaction costs and increasing the efficiency of access to financing. FinTech firms play an intermediary role for financial services in their provision to SMEs.