FinTech Innovations Research Articles

Human-AI collaboration to mitigate decision noise in financial underwriting: A study on FinTech innovation in a lending firm

Financial institutions have recognized the value of collaborating human expertise and AI to create high-performance augmented decision-support systems. Stakeholders at lending firms have increasingly acknowledged that plugging data into AI algorithms and eliminating the role of human underwriters by automation, with the expectation of immediate returns on investment from business process automation, is a flawed strategy. This research emphasizes the necessity of auditing the consistency of decisions (or professional judgment) made by human underwriters and monitoring the ability of data to capture the lending policies of a firm to lay a strong foundation for a legitimate system before investing millions in AI projects. The judgments made by experts in the past re-emerge in the future as outcomes or labels in the data used to train and evaluate algorithms. This paper presents Evidential Reasoning-eXplainer, a methodology to estimate probability mass as an extent of support for a given decision on a loan application by jointly assessing multiple independent and conflicting pieces of evidence. It quantifies variability in past decisions by comparing the subjective judgments of underwriters during manual financial underwriting with outcomes estimated from data. The consistency analysis improves decision quality by bridging the gap between past inconsistent decisions and desired ultimate-true decisions. A case study on a specialist lending firm demonstrates the strategic work plan adapted to configure underwriters and developers to capture the correct data and audit the quality of decisions.

Role Of Fintech Adoption on Banking Sector Efficiency: A Survey Based Research Approach

Comparing financial technology businesses during the fourth industrial age to their counterparts, this study investigates the effects of these companies adhering to effective manufacturing practices. The objective is to offer actual proof of the operational effectiveness of FinTech companies and how business efficiency affects market performance. FinTech has to pass through different business models to attain the maturity as a successful pure player actor. This demonstrates that FinTech innovations improve banks' performance using several panel data estimators, including panel-corrected standard errors for linear regression, fixed effects, and random effects. Furthermore, it also show that the proportion of capital that is adequate, earnings capacity, total assets, and yearly GDP growth rate of banks also have a noteworthy beneficial influence on bank performance. By using a balanced scorecard to examine financial points of view, customer perspectives, business internal perspectives, education and growth perspectives, and competitive advantage in services growth and development, monetary advantage, and economic inclusion when implementing FinTech, this study seeks to understand the impact of these factors on banks' performance. A sample of 259 respondents was collected from people working in banking sector. The variables that identify the role of Fintech adoption on banking sector efficiency are Financial Inclusion, Data Analytics and Insights, Cost Reduction, and Improved Customer Experience.

Challenges and Opportunities of Fintech Innovation for Traditional Financial Institutions

The rapid rise of fintech innovation has ushered in an era of change in the global financial services industry, presenting traditional financial institutions with a complex mix of challenges and opportunities. The dynamic interaction between fintech advances and the traditional banking system marks a pivotal moment in the financial industry, where the convergence of digital technologies with the financial services structure is reshaping the traditional banking business model. FinTech innovations, characterised by their flexibility, innovation and customer-centric solutions, are challenging the established models of traditional banks, forcing them to rethink their strategies, operations and services. These challenges are multifaceted, including the need for digital transformation, increasing competitive pressures from fintech startups, evolving consumer expectations for instant and seamless financial services, and the need to find a balance between innovation and financial stability and consumer protection in a changing regulatory environment. At the same time, fintech innovations offer unprecedented opportunities for traditional financial institutions to redefine their roles in the financial ecosystem, improve operational efficiency, and expand the scope of their services. By adopting blockchain technology to enable secure transactions, artificial intelligence technology to provide personalised customer service, and data analytics to improve risk management, traditional banks can open up new avenues for growth and innovation. In addition, fintech can enable traditional banks to offer convenient and affordable financial products to underserved or unbanked populations, thereby promoting financial inclusion. The intricate relationship between fintech innovation and traditional financial institutions embodies a dual narrative of disruption and convergence, highlighting the need for traditional banks to take a strategic and adaptive approach to navigating the fintech revolution. As traditional financial institutions endeavour to address the challenges posed by fintech and embrace the opportunities it presents, they will play a crucial role in shaping a more inclusive, efficient and resilient financial system of the future. The need for a nuanced understanding of technological, regulatory and market dynamics in the evolution of fintech underscores the importance of innovation, collaboration and customer-centricity in the development of the financial services industry.

Fostering fintech innovation: A tripartite evolutionary game analysis of regulatory sandbox experiments

The rapid integration of next-gen information technologies in finance has spurred FinTech innovation, posing challenges to regulation. Regulatory sandboxes are pivotal for fostering innovation. This study employs a FinTech innovation regulatory sandbox to analyze a tripartite evolutionary game involving government, FinTech enterprises, and the public. It examines strategic choices, equilibrium points, and the interplay of incentives and costs. Results highlight the pivotal role of FinTech companies. Recommendations include consistent government incentives to optimize resource allocation. In tepid engagement scenarios, FinTech companies and government entities lead the innovation adoption. In a context of significant technology spending, increasing initial willingness is crucial for optimize development.

Revealing the potential of FinTech innovation through knowledge assets: a study of firm financial performance

Purpose This study aims to investigate the association of FinTech innovation (FinTechINN) and firm performance (FP) by considering the role of knowledge assets (KA) as a causal mechanism underlying the FinTechINN – FP association. Design/methodology/approach In this study, the authors consider panel data of 1,049 Chinese A-listed firm and construct a structural model for corporate FinTech innovation, knowledge assets and firm performance while considering endogeneity issues in analyses over the period of 2014–2022. The modified value added intellectual capital (VAIC) and research and development (R&D) expenses are used as a proxy measure for knowledge assets, considering governance and corporate performance measures. Findings According to the findings of this study FinTech innovation (FinTechINN) has a positive significant effect on firm performance. Particularly; the findings disclose that FinTech innovations has a link with knowledge assets, FinTech innovations indirectly affects firm performance, and the association between FinTech innovation and firm performance is partially mediated by knowledge assets (MVAIC and R&D expenses). Originality/value Rooted in the dynamic capability and resource-based view, this study pioneers an empirical exploration of the association of FinTech innovation with firm performance. Moreover, it introduces the novel dimension of knowledge assets (on firm-level), acting as a mediating factor with in this relationship.

Mediating effect of financial inclusion on FinTech innovations and economic development in West Africa: Evidence from the Benin Republic

AbstractStudies from previous literature has exhausted the direct relationship between FinTech innovations and economic development with mixed findings. Thus, the current study investigates the mediating effect of financial inclusion on FinTech innovations and economic development in the Benin Republic. The study is survey research that used a questionnaire from bank customers and residents of suburb areas with a sample size of 357 respondents. The study employed a regression‐based data analysis technique using SPSS and SEM‐PLS 3 software. The results indicate a positive and significant relationship between FinTech and economic development. In addition, there is a positive and significant association between financial inclusion and economic development. The study also reports a positive and significant mediating role of financial inclusion in the relationship between financial technology and economic development. Consequently, the research confirms that financial inclusion serves as a crucial mechanism through which financial technology influences economic development. In light of these findings, it is recommended that efforts to enhance financial inclusion in the Benin Republic should specifically focus on fostering FinTech innovations to support sustainable economic development.

ASSESSING THE DIFFUSION OF FINTECH INNOVATION IN FINANCIAL INDUSTRY: USING THE ROUGH MCDM MODEL

We develop a conceptual structure to explore how financial technology (FinTech) innovation is being implemented to deal with vague, inconsistent and ambiguous knowledge in actual world. The structure of this study is built upon the technology, organization, environment (TOE) context, which one uses the concept of multi-criteria estimation to measure the significance of FinTech innovation. We develop an integrated MCDM (multiple criteria decision-making) model through rough set theory help administrators obtain a strategic influence relation map for enhancing performance approaching towards the aspiration value. This model involves three steps: primary, we apply this rough number to define group views which reflect upon experts’ real experiences; second, we use the rough DEMATEL-based ANP-(RDANP) to acquire the rough influential weights and rough influential network relationship map (RINRM) based on this TOE structure and its corresponding attributes; finally, we utilize the rough modified VIKOR with the influence to analyze the gap between the performance value and the aspirated level. The empirical case was originated from financial industry in Taiwan. According to the weighting results the expected benefits, technology integration, and competitive pressure were the most important criteria. Our results also illustrate how FinTech innovation can be used for promoting financial services.

A Survey on the Role of Technological Innovation in Nigerian Deposit Money Bank Fraud Prevention

Technological innovation plays a pivotal role in transforming the landscape of fraud prevention within Nigeria Deposit Money Banks (DMBs). This research explores the multifaceted impact of advanced technologies on fortifying the defenses of DMBs against fraudulent activities. Leveraging a comprehensive analysis of survey results and empirical data, the study delves into the perceptions and attitudes of stakeholders towards the integration of innovative solutions, including advanced data analytics, machine learning algorithms, real-time monitoring systems, and block chain technology. The findings reveal a widespread consensus among participants regarding the positive impact of these technologies on early fraud detection, prevention, and overall security. Notably, 86% of respondents acknowledge the positive impact of advanced data analytics and machine learning algorithms, emphasizing their potential benefits in thwarting fraudulent activities. Real-time monitoring systems, artificial intelligence, robust encryption, and cyber security protocols were also recognized by a majority of participants, affirming their crucial roles in bolstering fraud prevention measures within DMBs. The study employs a chi-square test to establish significant relationships between technological innovation and the enhancement of fraud prevention mechanisms, supported by calculated values exceeding critical thresholds. Furthermore, the abstract highlights the importance of continuous staff training, collaboration with fintech innovators, and regular security audits as integral components of a holistic fraud prevention strategy. The overall positive sentiments expressed by respondents underscore the transformative potential of technological innovation in mitigating fraud risks. This study contributes valuable insights that inform decision-making processes, guiding the strategic integration of advanced technologies within the Nigerian banking sector to reinforce operational frameworks against emerging fraud challenges. Technological innovation stands as an indispensable catalyst for fortifying the defense mechanisms of Nigeria Deposit Money Banks against fraud. The seamless integration of advanced technologies not only enhances security measures but also fosters a more robust, efficient, and resilient banking system, thereby mitigating risks and fostering sustainable growth in the financial sector.

Accelerating Financial Inclusion of the Urban Poor: Role of Innovative e-Payment Systems and JAM Trinity in Alleviating Poverty in India

Financial exclusion of low-income groups in urban areas remains a key policy challenge in India. This study examines the potential of e-payment systems and the Jan Dhan Aadhaar Mobile (JAM) trinity in enhancing access of the urban poor to social welfare schemes, thereby alleviating poverty. A survey of 585 economically weaker section households across 12 cities in Punjab state was conducted. The results indicate greater awareness of mobile and UPI payments compared to cards, but adoption gaps exist across demographic segments. Younger educated male earners perceive individual benefits like convenience and government benefits like transparency in e-payments. Integrating innovative e-payments in welfare programs increases the reliability of transactions, leading to positive multiplier effects on income, assets and skills and reducing vulnerabilities for the urban poor. The findings highlight the need for targeted initiatives by policymakers and Fintech firms to digitize payments and customized implementation measures to promote adoption among low-income citizen groups. This includes digital literacy programs, trust-building, co-creating tailored products and integrating e-payment mechanisms into social schemes. Thus, leveraging Fintech innovations through strategic policies and cross-sector partnerships can significantly advance financial inclusion to create a more equitable digital economy where the urban poor are not left behind.

The Implications and Challenges of Fintech Innovation: Analysis Based on Blockchain, Big Data, and Artificial Intelligence

The Implications and Challenges of Fintech Innovation: Analysis Based on Blockchain, Big Data, and Artificial Intelligence

Розвиток інновацій у системі фінансового контролю підприємницьких структур: соціальні проблеми впровадження та правовий статус інформаційних ресурсів

The article is devoted to studying the impact of the rapid development of financial technologies (fintech) on the system of financial control in business structures. The systemic changes in financial services thanks to fintech are highlighted, and its importance and challenges for modern business are emphasized. The article includes research on various fintech innovations, including digital payments, blockchain, artificial intelligence, and data analytics. The work examines social problems associated with introducing innovations and the legal status of information resources involved in financial control. The potential advantages and problems of introducing technological and financial innovations into the financial control system are substantiated. Adhering to ethical principles, including data privacy, transparency, and bias, was emphasized, especially when implementing blockchain and artificial intelligence innovations. The risks and challenges associated with introducing fintech innovations in financial control were revealed, and the authors analyzed social aspects such as resistance to change, uncertainty in new technologies, and information confidentiality. An important consideration is also the legal status of information resources used in financial control. A few limitations and synergistic effects in the financial control of business structures, positive and negative aspects of innovations in the financial control system, and determination of ways to overcome existing challenges have been identified. The methodological basis of the article includes historical and logical methods, legal, ethical, comparative analysis, and data triangulation methods. The historical and logical method is used to analyze the evolution of financial and technological innovation. With the help of legal analysis, normative legal acts relating to the relevant sphere of social relations were studied. The ethical analysis allowed us to identify ethical guidelines for assessing the social and legal consequences of innovations in financial control. Comparative analysis has become the basis for comparing enterprise approaches to introducing innovations into the financial control system. Generalizing situational problems made it possible to evaluate the results of innovation implementation by business structures. The data triangulation method ensured the high reliability of the research results. The integration of these methods made it possible to obtain a comprehensive understanding of innovations in financial control, to study the social problems of their implementation, and to study the legal status of information resources in the context of relevant risks and challenges. Keywords: business structures, innovative development, financial control, social risks, social challenges, information resources, legal information.

Effect of Knowledge Application and Knowledge Storage on Bank Performance Through Fintech Innovation

Yemeni banks are generally performing well in terms of their operations, but their performance needs to be enhanced and developed using knowledge management as there haven't been many studies done yet on them. This article, therefore, aims to investigate the effect of knowledge application (KA) and knowledge storage (KS) on bank performance (BP) of Yemeni banks with mediating role of fintech innovation (FI). A sample size of 360 respondents from the banks were selected for the study. The authors used a Partial least squares structural equation modelling (PLS-SEM) to analyse the data. The study reveals that KA and KS positively and significantly impact bank performance. In addition, fintech innovation positively and significantly meadiates the relationship between KA, KS, and BP. This highlights the importance of FI in the effective use of knowledge and its impact on BP. These findings provide valuable insights for banks looking to improve their performance through effective knowledge management (KM) and the implementation of fintech innovations

Fintech Innovation in Micro and Small Business Financing

This paper delves into the transformative role of financial technology (FinTech) innovations in facilitating financing for small and micro enterprises (SMEs), a sector historically marred by limited access to traditional financial services. Despite their significant contribution to economic growth and employment, SMEs often face substantial barriers in securing necessary capital due to stringent credit evaluations, lack of collateral, and the disproportionate costs of small-scale lending. FinTech innovations, leveraging cutting-edge technologies such as artificial intelligence, blockchain, and big data analytics, present a paradigm shift, offering more accessible, efficient, and tailored financial solutions. This study explores the evolution of FinTech, its impact on traditional banking, and its potential to bridge the financing gap faced by SMEs. Through an analysis of current financing challenges and the application of FinTech solutions, this paper highlights how digital platforms, alternative credit scoring models, and novel funding mechanisms are revolutionizing SME financing. Furthermore, it discusses the regulatory landscape, emphasizing the need for policies that support FinTech growth while ensuring financial stability and consumer protection. Looking forward, the paper outlines the anticipated trends in FinTech innovations and their continued influence on SME financing, advocating for a collaborative approach among policymakers, financial institutions, and FinTech firms to foster a more inclusive financial ecosystem. The conclusion underscores the critical role of FinTech in empowering SMEs, driving economic diversity, and promoting sustainable development.

Corporate Governance and FinTech Innovation: Evidence from Saudi Banks

The rising adoption of FinTech is changing the financial sector. However, the determinants of FinTech have not been examined thoroughly. The purpose of this paper is to examine whether corporate governance is related to FinTech products in the banking sector, given that governance may influence the quantity and quality of innovation. Specifically, we investigate the association between the size of the board of directors, the percentage of independent directors on the board and FinTech services. Furthermore, we show how the composition of the board can influence the association between FinTech services and a bank’s performance. Using a sample of 12 Saudi banks for the period 2014–2019, we find that board size is significantly and negatively associated with a bank’s FinTech score. We further show that independent members on the board contribute to performance by bringing more FinTech services (innovation development) to the banks. As the first study examining the determinants of FinTech in the Saudi banking sector, this paper may help regulators to better understand the drivers of FinTech and its quality in the banking sector.

The Impact of Fintech Innovation on Bank’s Performance: Evidence from the Kingdom of Bahrain

This study investigates the impact of bank-level Financial Technology (Fintech) innovations on banks’ performance in the Kingdom of Bahrain from 2012-2021. Annual data of banks listed in Bahrain’s Bourse has been utilized to achieve this objective. In addition, bank-level FinTech indices have been constructed by a textual analysis method that assesses input dimensions through 32 keywords under four categories, including artificial intelligence, blockchain, cloud computing, and big data; FinTech output dimension is evaluated through payment and settlement, resource allocation, risk management, and channel construction technology. Using different panel data estimators, such as pooled OLS, fixed effects, random effects, and panel-corrected standard errors linear regression, results show that FinTech innovations increase banks’ performance. In addition, the findings demonstrate that banks' capital adequacy ratio, earnings ability, total assets, and annual GDP growth rate also significantly positively impact bank performance. Years in business have a significant adverse effect on bank performance. Interestingly, conventional and state-owned banks have a higher positive impact on returns on assets (ROA) than Islamic and privately owned banks. Policymakers and investors should pay close attention to facilitating ongoing FinTech innovations in the Kingdom of Bahrain to create opportunities and build a more inclusive and efficient financial sector.

Unveiling the landscape of Fintech in ASEAN: assessing development, regulations, and economic implications by decision-making approach

Fintech has gained immense importance as a catalyst for economic growth, trade enhancement, and global prosperity. This study aims to comprehensively assess the influence and potential of Fintech in the Association of Southeast Asian Nations (ASEAN) countries. The research objective is to evaluate the levels of development in financial activities, technology infrastructure, and Fintech-enabling regulations across the region. A robust decision-making framework combining numerical and linguistic assessments is applied, utilizing the Distance-based CRiteria Importance Through Inter-criteria Correlation (DCRITIC) method and the Fuzzy extension of Evaluation based on Distance from Average Solution (F-EDAS approach). The findings reveal varying levels of development among ASEAN countries about Fintech. Governments and policymakers are urged to prioritize the creation of a supportive environment for Fintech innovation to spur economic growth, attract investments, and foster digital transformation. The study is limited because the weights of the key regulations have not been investigated.

The Legal Protection of Personal Data in Fintech peer-to-peer (P2P) Lending Practices: Orientation and Formulation

<em>In the era of digital transformation, one prominent model of Fintech is Peer-to-Peer (P2P) lending, which offers alternative financing access through digital platforms. The protection of personal data in P2P lending becomes crucial as sensitive information such as financial and credit history is collected and processed by these platforms. Data protection regulations, like GDPR, play a vital role in maintaining the balance between Fintech innovation and individual privacy rights. This research aims to discuss the legal protection of personal data within the context of Peer-to-Peer (P2P) Lending in the realm of Financial Technology (Fintech) in Indonesia. The research methodology employed is normative law, using descriptive legal analysis. Data is gathered from various sources, including legal statutes, court decisions, legal literature, and government guidelines related to Fintech and personal data protection. Qualitative analysis is conducted to identify relevant legal provisions, explain their legal implications, and formulate improvement recommendations. The research findings reveal that personal data protection within Indonesian Fintech P2P Lending is governed by a range of regulations, including the Electronic Information and Transactions Law (UU ITE), the amended UU ITE, OJK regulations, and the Ministry of Communication and Informatics regulations. Moreover, the Omnibus Law on Job Creation provides a strong foundation for the protection of consumer personal data. Key principles in personal data protection encompass transparency, explicit consent, data security, limited data usage, fair and ethical business practices, individual rights over personal data, and data integration</em>

The impact of FinTech innovation on digital financial literacy in Europe: Insights from the banking industry

Within the evolving financial industry, characterised by the proliferation of FinTech and exacerbated by the Covid-19 , this paper investigates the unexplored relationship between financial, social, infrastructural factors and the level of digital financial divide (DFD) in Europe. Applying a difference-in-difference model, the study reveals that innovation in financial services correlates with a reduced DFD, further reinforced by improved digital infrastructure and social progress. However, the post-Covid environment has widened the gap in EU financially illiterate regions. Our results hold relevance for policymakers, governments, and supervisory banking authorities, indicating the most effective areas for intervention in lowering the country's DFD, but they could also support banks in the design of tailor-made digitalization strategies.

Fintech, green imports, technology, and FDI inflow: their role in CO2 emissions reduction and the path to COP26: a comparative analysis of China.

This study uses a nonlinear autoregressive distributed lag (NARDL) model to investigate the relationships between CO2 emissions, green energy imports, foreign direct investment (FDI) inflow, and financial technology (fintech) in China. It examines both short- and long-term asymmetries, reflecting the positive and negative effects of variables of interest on CO2 emissions. The results indicate that increasing fintech and green energy imports will decrease environmental pollution, as fintech and green technology negatively affect CO2 emissions in a positive shock and have positive effects in a negative shock. We also found that imports negatively affected CO2 emissions in the context of green energy imports. However, FDI inflows have conflicting outcomes, being positively beneficial during positive shocks and adversely significant during negative shocks. Moreover, green energy imports led to a considerable increase in CO2 emissions during negative shocks. These findings highlight the importance of considering economic factors when developing environmental regulations. Policy recommendations for COP26 include fostering sustainable fintech innovation, investing in green technology research, bolstering renewable energy imports, and improving climate legislation to build a greener and more sustainable future for China.

Fintech Innovations in Financial Inclusion: A Bibliometric and Systematic Review

Recent advancements in technology are opening doors for marginalized and low-income communities to access financial services through innovative solutions. This study utilized a combined approach of bibliometric analysis and systematic review. It provides a comprehensive outline of fintech in financial inclusion by analyzing the current publication trends. Reviewing 235 articles in the Scopus database from 2016 to 2024, we find a drastic rise in the number of articles in the research area. This research breaks new ground by specifically examining the influence of financial technology (fintech) on financial inclusion. While mobile money and financial inclusion have been a wellexplored area, this study delves deeper. It presents a multifaceted view of how fintech contributes to financial inclusion. Here, the analysis focuses on three key aspects: (i) Recent Trends: The study identifies the latest developments in fintech research related to financial inclusion, (ii) Research Landscape: It pinpoints the most prolific authors and countries in this field, providing insights into the maturity of the research area, (iii) Fintech Channels: The analysis explores the various channels through which fintech fosters financial inclusion. The findings demonstrate that fintech holds significant potential to drive inclusive finance, potentially leading to a more robust financial industry. Conclusion and Discussion part depicts the overall developments and diversification in the area.