Can fintech affect the performance of commercial banks in developed countries? Does ownership matter?

Abstract

The development of fintech has challenged traditional financial institution models, forcing banks and other financial institutions to accelerate reforms and modernize their technology.  Fintech brings a paradigm in which information technology drives innovation in the financial industry. Fintech represents a disruptive innovation that is capable of shaking up traditional financial markets. In this paper, we study the developed financial market, where FinTech growth has been impressive in recent years. To this end, we use a sample of commercial banks from five developed countries: the USA, the UK, France, Germany and Spain over the period from 2019 to 2022. We test our hypothesis using two dynamic estimation models: SYS-GMM and DIFF-GMM. The results show that the development of FinTech has a positive impact on bank performance.

The results based on ownership structure shows that the effect of fintech is greater for private banks that have achieved important digital transformation than for public banks.