The impact of FinTech firms on bank performance: evidence from the UK

Abstract

PurposeThis study examines the impact of financial technology (FinTech) on bank performance employing data from the United Kingdom (UK) banking sector for a period spanning from 2010 to 2019.Design/methodology/approachThis study employs static as well as dynamic panel data regression analysis to assess the impact of FinTech on the profitability of UK banks.FindingsThe results show that FinTech firms positively impact bank performance. For every new FinTech firm introduced into the UK market, net interest margin (NIM) and yield on earning assets (YEA) increase by 6.385 and 3.192% of their sample means, respectively.Practical implicationsCooperating with FinTech firms, UK banks can broaden their portfolio of financial services offered to their customers and optimize their profit margins.Originality/valueThis is the first study that examines the impact of FinTech on bank profitability employing data from a developed market.