EFFECT OF ARTIFICIAL INTELLIGENCE AND BIG DATA ON PERFORMANCE OF DEPOSIT MONEY BANKS IN NORTHEASTERN NIGERIA: MEDIATING ROLE OF ABSORPTIVE CAPACITY

Abstract

Deposit Money Banks (DMBs) plays a crucial role in the economic transformation of developing nations,
addressing various challenges such as weak international trade support, economic instability and inflation,
inefficient payment system, and capital scarcity. Despite their significant contribution to economic growth, these
banks have faced numerous challenges such as high operational costs, fraud, and intense competition, which have
constrained their performance. Many challenges faced by these bank, however, stem from non-adopting of artificial
intelligence (AI) and big data (BD) technologies. While existing research has practically acknowledged the growing
adoption of AI and BD technologies in the global banking sector, there is limited empirical evidence on how these
technologies influence the performance of DMBs in Nigeria. Furthermore, the role of absorptive capacity (AC) in
enhancing the effectiveness of these technologies remains underexplored. This knowledge gap calls for an empirical
study of the phenomenon. This study adopted a survey research design. Copies of questionnaire were administered
to 375 staff of DMBs operating in the Northeastern Nigeria. Utilizing Structural Equation Modeling (SEM) with
Smart PLS 4, the study aimed to examine the mediating role of absorptive capacity on the relationship between
artificial intelligence and big data and performance of deposit money banks. The findings from the empirical study
reveal that artificial intelligence has positive and significant effects on the performance of DMBs. In contrast, big
data was found to have a weak and insignificant effect on DMBs performance. Moreover, on the indirect effect,
knowledge transformation of absorptive capacity fully mediates the relationship between artificial intelligence and
DMBs performance. Furthermore, transformation do not mediates the relationship between big data and DMBs
performance. In the light of these findings, the study among other things recommends that deposit money banks
should continue investing in AI-powered solutions such as chatbots, fraud detection systems, and predictive
analytics to further enhance performance; and also prioritized employee training on AI applications to maximize
efficiency and innovation.