The effect of digital disruption on corporate banking operational risk: A case study of Sterling Bank, Kano.
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Background of the Study
Digital disruption has emerged as a double-edged sword for corporate banking, offering innovative solutions while simultaneously introducing new operational risks. Sterling Bank, Kano, has been actively integrating digital technologies such as real-time monitoring systems, automated compliance tools, and advanced data analytics to improve operational efficiency. However, this rapid digitalization also exposes the bank to unprecedented operational risks, including system outages, data breaches, and cybersecurity threats (Adeniran, 2023). The concept of digital disruption refers to the significant changes brought about by digital technologies that fundamentally alter how banking services are delivered and managed (Balogun, 2024).
Sterling Bank’s journey toward digital transformation illustrates both the benefits and the vulnerabilities inherent in this process. On one hand, digital tools streamline operations and improve decision-making capabilities; on the other hand, they create new points of failure that can lead to significant disruptions in service. The integration of digital systems often requires the replacement or modification of legacy systems, which can lead to operational inconsistencies and heightened risk exposure (Chinwe, 2025). Moreover, the increasing reliance on digital processes necessitates rigorous cybersecurity measures and continuous system monitoring to prevent disruptions and mitigate potential risks.
This study investigates the impact of digital disruption on operational risk within Sterling Bank’s corporate banking division. It examines how the adoption of new technologies affects the bank’s risk profile, the nature of operational failures, and the measures implemented to address these challenges. By evaluating the interplay between digital innovation and operational risk, the research aims to provide insights into best practices for managing digital disruption in a corporate banking context.
Statement of the Problem
While digital disruption offers opportunities for enhanced efficiency, Sterling Bank, Kano, faces significant challenges in managing the associated operational risks. A primary problem is the increased likelihood of system failures and data breaches as the bank transitions from legacy systems to digital platforms (Ibrahim, 2023). The integration process often results in compatibility issues that can compromise the stability of critical banking operations. In addition, the rapid pace of technological change outstrips the bank’s ability to update its risk management protocols, leaving it vulnerable to emerging cyber threats.
Furthermore, there is an inherent tension between the need for innovation and the imperative to maintain robust operational controls. The push for digital transformation sometimes results in shortcuts in risk assessment and internal controls, exacerbating operational vulnerabilities. These challenges not only affect service delivery but also pose a threat to the bank’s reputation and regulatory compliance. This study seeks to explore the extent to which digital disruption has altered the risk landscape for Sterling Bank, identifying key areas where operational risk is elevated and proposing strategies to mitigate these effects (Oluwaseun, 2024).
Objectives of the Study
• To examine the impact of digital disruption on operational risk in corporate banking at Sterling Bank, Kano.
• To identify the key challenges associated with transitioning from legacy systems to digital platforms.
• To propose risk mitigation strategies that balance digital innovation with operational stability.
Research Questions
• How does digital disruption affect operational risk in corporate banking at Sterling Bank?
• What are the main challenges in integrating digital platforms with legacy systems?
• What strategies can mitigate the operational risks associated with digital disruption?
Research Hypotheses
• H1: Digital disruption significantly increases operational risk in corporate banking at Sterling Bank.
• H2: Integration challenges between legacy systems and new digital platforms are a major contributor to operational failures.
• H3: Implementing comprehensive risk management strategies reduces the negative impact of digital disruption.
Scope and Limitations of the Study
This study focuses on the corporate banking division of Sterling Bank, Kano, analyzing the effects of digital disruption on operational risk. Limitations include potential biases in internal reporting and restricted access to detailed risk management data.
Definitions of Terms
• Digital Disruption: The transformation of traditional processes through the adoption of digital technologies.
• Operational Risk: The risk of loss resulting from inadequate or failed internal processes, systems, or external events.
• Legacy Systems: Older technology infrastructures that may hinder seamless digital integration.
• Risk Mitigation: Strategies designed to reduce the adverse effects of risk.
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