The New Era of Financial Technology in Banking Industry

Abstract

The purpose of this research paper is to examine the impact of FinTech companies compared to the traditional banking industry. FinTech is a digitalized financial solution that is offered to small businesses and individuals to fulfill their banking needs. It is expected that FinTech companies will be able to offer the same banking products as existing banks, but the FinTech companies are predicted to grow at a faster pace in countries where digital technology is available. There has been mention that FinTech companies have already had a financial impact on the performance of traditional banks. This research paper undertakes to determine if there is enough empirical evidence to support these hypotheses. A study model has been designed that identifies the dependent and independent variables for each hypothesis. The research undertaken to validate this theory will be drawn from the previous literature by academic authors. The findings from the research indicate that FinTech company formations will grow faster in an environment where digital technology is available and mobile phone penetration is widespread. Results show that profitability does change for the traditional banks when there are FinTech companies present in a country and when the banks adopt their own financial technology into their business model. The results from statistical analysis show that the impact of financial technology on the banking sector’s profitability is statistically insignificant.