The Insinuations of Fintech on Risk - Taking: Mitigating the Professional Outcomes of Bank Operations

Abstract

The proliferation of fintech has antiquated the conventional banking enterprise models of developing nations. It is currently unknown what effect fintech will have on the output and willingness of banks to take risks. This objective of the study is to limelight how financial institutions' perspectives on risk and productivity have shifted due to their adoption of fintech solutions. Researchers analysed annual data from four commercial banks in India (BOI, IDBI, FB, HDFC) for their quantitative analysis between 2022 and 2023. In order to evaluate the theoretical mediation hypothesis put forward in this research, path analysis and structural equation modelling (SEM) were applied to panel data. It was done to evaluate the hypothesis. According to the findings, implementing this fintech solution into the workings of banks reduces the amount of risk taken on by the bank. It improves the effectiveness with which its operations are carried out. The results of the path analysis showed that operational efficiency acts as a mediator between risk appetite and the adoption of fintech products by banks in India. In addition to other findings, the study discovered that. This article travels around commercial and central banks which are responsible for formulating monetary policy. The findings could be useful for business banks that employ fintech tools to boost productivity and reduce exposure to risk. It is the first empirical work that we are aware of that travel around how the spread of fintech products has altered the risk perception of customers and the productivity and profitability of banks in low-income and middle-income nations.