Impact of financial technology on Algerian bank performance

Abstract

Purpose. The aim of this study is to determine the impact of financial technology on the performance of banks in Algeria. Results. We found that the expansion of the scope of application of financial technology allows banks to gain a prominent position in the banking market, reduce costs, manage risks, predict crises, achieve customer satisfaction, promote and diversify services, which positively affects the development of financial and commercial performance of commercial banks in Algeria. Through the applied study, the authors reached the following results: (1) rejection of the first hypothesis, which states that there is no significant impact of credit card balances on the rate of return on assets; (2) accept the second hypothesis that there is no significant impact of the value of technological assets on the rate of return on assets; (3) rejection of the third hypothesis, which states that there is no significant impact of credit card balances on the rate of return on equity; (4) accept the fourth hypothesis, which states that there is no significant impact of the value of technological assets on the rate of return on equity. In light of the findings, the authors recommend the following: (1) the need to pay attention to financial technology because of its positive impact on the banking sector, perhaps the most important of which is improving the quality of financial services provided to customers in terms of speed and cost; (2) the need for banks to pay attention to financial innovations because of their importance and impact on their financial and competitive position; (3) the need for banks to cooperate with startups in the field of financial technology in order to benefit from these companies in developing their various banking services; (4) the need to improve the ICT infrastructure; (5) the need to develop effective models to reduce the risks associated with financial technology innovations; (6) the need to conduct awareness campaigns for customers about the importance of financial technology and its benefits; (7) the need to spread the culture of using financial technology among customers, especially in light of the Covid-19 crisis. Scientific novelty. The study identified the factors that influenced the change in the performance of banks in Algeria during the popularization of the use of financial technology: credit cards, return on assets, return on equity, technological assets, growth rate, inflation rate and value at risk. The authors proposed two sets of measures (short-term and long-term) that would promote the use of fintech in order to positively impact the performance of banks in Algeria. Practical value. The practical significance of this study lies in its potential as a valuable resource and tool to promote the use of financial technology as a powerful catalyst to improve and promote the bank performance, particularly in the area of credit card proliferation and the exploration of financial innovations.