Fintech Innovations: The Impact of Mobile Banking Apps on Bank Performance in Vietnam

Abstract

This paper is aimed at analyzing the impact of FinTech innovations on bank performance across mobile banking applications in Vietnam. Using the longitudinal panel data from 2010-2019 (with 220 observations) of 22 local commercial banks in Vietnam. Multivariate panel regression is chosen to experimentally test the research hypotheses. This research paper is one of the first quantitatively investigating the effects of fintech innovation (mobile banking apps) on bank performance in Vietnam. In addition, studies on financial indicators are shown quite comprehensively in the period 2010-2019. Our empirical study has shown the following results: (i) FinTech innovations’ positive impact on bank performance in Vietnam; (ii) Banks’ adoption of mobile banking technologies positively impacted banks’ fee-based income, consumer loans and money market deposits; (iii) The effect of mobile technologies on financial performance was much stronger for small banks than large banks; (iv) As for the balance sheet liabilities aspect, the money market fund of small banks is positively affected by the mobile banking application; (v) In terms of balance sheet assets, consumer loans by small banks are positively affected by the mobile banking application while large banks are not; (vi) GDP per capita has a positive effect on the ROE of both small and large banks; (vii) Mobile phone penetration rates positively affected bank ROA and ROE and its effect was larger on small banks. From the findings, key recommendations to Vietnamese commercial banks to improve bank performance in the context of an increasingly technological development are to: (1) Increase investment in mobile banking apps and the entire mobile banking technology; (2) Increase investment in financial technology, focus more on mobile banking users and the entire mobile banking services; (3) Take advantage of the technical support and consultancy of international organizations and bilateral cooperation with other countries' authorities in management of Fintech businesses; (4) Learn from commercial banks in other countries to draw experiences, thereby develop in own context. (5) Training human resources for the finance and banking industry to not only have professional knowledge and ability to analyze data, but also have to be proficient in operating digital technology. Keywords: Fintech Innovations, mobile banking apps, bank performance, Vietnam, theories of Technological Innovation.