Traditional Financial Institutions Research Articles

The Impact Of Fintech Innovations On Traditional Financial Institutions, Financial Inclusions, and Payment Systems – A Review Of Case Studies

Fintech (monetary innovation) advancements have been reshaping the monetary scene, altering the manner in which individuals access monetary administrations, go through with exchanges, and deal with their funds. It has fundamentally disturbed the customary monetary scene, it are conveyed and experienced to change the way monetary administrations. Fintech startups have pushed traditional financial institutions to change and improve their services in order to remain competitive with agile, customer-focused solutions. Fintech has revolutionized payment systems simultaneously by introducing digital payment methods and making cross-border transactions easier, reducing cash-based systems' reliance. Most importantly, fintech has increased financial inclusion by enabling individuals and small businesses to participate more actively in the formal economy by providing formal financial services to previously underserved populations via mobile platforms. While the extraordinary effect of fintech is apparent, policymakers and partners should address administrative intricacies and network protection dangers to guarantee supportable and comprehensive monetary environments. This article looks at the extraordinary effect of fintech on customary monetary foundations, installment frameworks, and monetary incorporation. By breaking down different literary works and contextual analyses, the specialist attempts to investigate how fintech has disturbed conventional practices, further developed productivity, and cultivated more noteworthy monetary incorporation around the world. IndexTerms - Fintech, computerized installments, monetary environment, network safety, monetary consideration, artificial intelligence, man-made consciousness, information security, risk.

Shadow Banking in the United States: Emerging Factors, Operation Modes and the Current Situation of Supervision - Based on the Comparison with Chinese Shadow Banking System and Market

In 2009, Ben Bernanke, chairman of the Federal Reserve, described shadow banking as a financial intermediary that converts savings into investments in addition to regulated deposit-taking institutions. To put it simply, the essence of shadow banking is a financial innovation that breaks through traditional financial institutions in order to maximize profits in the financial market environment. In this paper, we compare the U.S. and Chinese shadow banking system and their market system. From that, we analyze their similarities and differences from the aspects of emerging factors, classification and scale, and operation mode. Based on the above analysis, we then discuss the current situation of supervision of shadow banking in the United States and find that the U.S. shadow banking is negligent in institutional constraints and has practical difficulties in legal supervision. Finally, we put forward some suggestions on the future development and financial structure optimization of shadow banking.

Harnessing FinTech for Sustainable Finance in Developing Countries: An Integrated SWOT–Multi-Level Perspective Analysis of Mongolia

This research paper investigates the potential of FinTech solutions in promoting sustainable finance in Mongolia, an emerging market economy with a burgeoning FinTech landscape. This study explores how Mongolia leverages FinTech innovations to advance sustainable development goals. Utilizing secondary data sourced from Mongolian government agencies, global financial organizations, academic institutions, market research firms, and industry associations, we conducted an integrated SWOT-MLP analysis of Mongolia’s FinTech industry, which includes the FinTech business models, ecosystem, regulatory frameworks, traditional financial institutions, and stakeholders. This study presents a comprehensive analysis of the opportunities and challenges facing Mongolia in integrating FinTech into its sustainable finance agenda, and SWOT-based strategies.

Payment card interchange fee regulation and financial institutions: The effects on traditional and fintech financial conglomerates*

This paper investigates the effects of credit card interchange fee regulation on the performance of traditional and fintech financial conglomerates. Using data from 2017 to 2021 of individual financial institutions and conglomerates operating in Brazil and parameters estimated by previous studies, we simulate the impact of that regulation on financial conglomerates. We find that an interchange fee cap increases the return of fintech conglomerates, whereas it decreases the return of conglomerates led by traditional financial institutions. Furthermore, we find that such regulation reduces the return of all conglomerates, traditional and fintech ones, that provide greater financial sophistication and credit growth.

FinTech, systemic risk and bank market power – Australian perspective

This study investigates idiosyncratic/firm-specific risk and systemic risk of FinTech firms and traditional financial institutions (FIs) in Australia. It also examines the impact of FinTech growth on bank market power. I find that stock return and idiosyncratic risk are higher in FinTech firms than in traditional FIs. Regarding systemic risk, FinTech firms are more exposed/vulnerable to systemic shocks than traditional FIs. However, they do not contribute to higher systemic risk as compared to traditional FIs. There is no substantial evidence that bank market power (captured by Lerner index) reduces due to the growth of FinTech firms. Yet, there is partial evidence that some accounting performances of banks may decline due to the growth of FinTech firms. Since FinTech firms are highly exposed/vulnerable to systemic shock, regulators should continue monitoring FinTech development closely and ensure that investors are aware of the risk and retail consumers of these firms are well protected.

Invest in Idea: Crowd Funding with Predicting Startup Success

Abstract: Crowd funding enables individuals or businesses to raise funds for their projects, ventures, or caused by tapping into a large pool of contributors. It democratizes access to capital, allowing creators to bypass traditional financial institutions and engage directly with their community or target audience. This method fosters innovation, empowers grassroots movements, and facilitates the realization of diverse ideas that might otherwise struggle to secure funding through conventional channels. Utilizing a rich dataset encompassing funding details, milestones, relationships, and geographical data of various startups, we embark on an in- depth analysis involving data preprocessing, feature engineering, and exploratory data analysis to uncover key success determinants. Employing advanced classifiers like LGBM, XG Boost and gradient Boosting, our model undergoes rigorous training and evaluation, with LGBM emerging as the top performer, achieving an accuracy of 90.48%. The analysis underscores the critical role of funding, and investor presence in forecasting startup success. This research not only equips stakeholders with a powerful predictive tool but also highlights significant features influencing startup outcomes, offering a novel perspective on strategic investment planning. Additionally, we developed an interactive frontend platform to complement our predictive model. Utilizing AngularJS, the platform serves as a gateway for startups to register their ventures, providing realtime access to predictive insights. Through intuitive forms, startups enter essential information such as geographical location, funding received, and sector of operation. Upon submission, the data is processed by our backend, which evaluates it against our machine learning model to predict success rates. This integration empowers startups with immediate insights and facilitates data-driven decision-making among investors, thereby fostering a more dynamic and informed startup ecosystem.

Commercial bank digital transformation, information costs, and corporate financial constraints

ABSTRACT The rapid development of digital finance has transformed traditional financial institutions. We investigate the effect and economic consequences of bank digital transformation on corporate financial constraints using data from China. The results show that bank digital transformation alleviates corporate financial constraints by decreasing information search, processing, and verification costs. Furthermore, the effect of bank digital transformation on corporate financial constraints is more pronounced for firms with higher contract intensity, more intangible assets, and poorer external information environment. We also find that bank digital transformation alleviates corporate financial constraints by increasing debt financing. In addition, we show that digital transformation promotes lending by big banks, resulting in the crowding-out effect. Finally, we find that bank digital transformation promotes the flow of credit resources to non-zombie firms, which effectively improves credit allocation efficiency. This paper extends research on digital finance and new structural finance from the perspective of bank digital transformation.

Decentralized Finance (DeFi) and Traditional Banking: A Convergence or Collision

Decentralized Finance (DeFi) and Traditional Banking: A Convergence or Collision

Emerging Trends in Fintech: Revolutionizing Financial Services in Commerce

Financial technology (Fintech) is revolutionizing commerce and reshaping the financial services industry through technological advancements, innovative business models, and collaborative ecosystems. This abstract provides an in-depth overview of the impact of Fintech on various aspects of commerce, including traditional banking, wealth management, e-commerce, supply chain finance, regulatory environment, and the role of startups and innovation hubs. Drawing insights from a comprehensive analysis of existing literature and research findings, this abstract explores the transformative potential of Fintech and outlines key implications and future directions for the industry. Evolution of Fintech has been propelled by advancements in technologies such as blockchain, artificial intelligence (AI), and machine learning (ML). These technologies enable decentralized and transparent transactional capabilities, data-driven insights, and automation, driving efficiency and innovation across the financial services landscape. In particular, the integration of Fintech in traditional banking has led to the rise of digital banking platforms, mobile payment solutions, and peer-to-peer lending networks, challenging traditional banking practices and enhancing customer experiences. Furthermore, automated wealth management platforms and robo-advisors are democratizing access to investment services, offering individualized investment advice, and reshaping wealth management strategies. The integration of Fintech in e-commerce and supply chain finance is enhancing efficiency, transparency, and security in online transactions, benefiting both merchants and consumers. Digital wallets, payment gateways, and blockchain applications are streamlining payment processing and optimizing cash flow across the supply chain ecosystem. While Fintech presents significant opportunities for innovation and growth, it also poses regulatory challenges and considerations. The regulatory environment surrounding Fintech is complex and multifaceted, requiring a balance between promoting innovation and ensuring consumer protection, market integrity, and financial stability. Collaboration between startups, established institutions, and regulatory authorities is essential for navigating regulatory complexities and fostering a conducive environment for Fintech growth. Startups and innovation hubs play a crucial role in driving Fintech innovation and entrepreneurship, providing support infrastructure, mentorship, and access to capital. These stakeholders foster collaboration, experimentation, and knowledge exchange, accelerating industry transformation and driving economic development. Moreover, collaboration between traditional financial institutions and Fintech startups is essential for driving innovation and expanding access to financial services.

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.

Using dynamic capabilities to cope with digital transformation and boost innovation in traditional banks

Financial institutions operate in a competitive, complex, and uncertain environment. A series of changes—many accelerated by the COVID-19 pandemic—demand innovative movements from the organizations that operate in the sector. The emergence of new business models (e.g., fintecs) requires a realignment of the capabilities of traditional organizations, such as banks. Indeed, internal adaptations and the formulation of market strategies focused on a digital user are part of the current narrative. But how can it be executed? This article explores the relationship between dynamic capabilities and digital transformation. In summary, we present insights about how dynamic capabilities can drive innovation in traditional financial institutions based on the challenges brought by digital transformation. Starting from a Brazilian case study, we identified that external and internal contextual factors—especially the political-legal environment and cultural and governance issues—are necessary for stimulating the dynamic capabilities that should be addressed for digital transformation. Finally, we propose a framework that summarizes how dynamic capabilities enable the guidance of traditional banks amid challenges caused by digital transformation.

Enhancing the Adoption of Financial Innovations to Foster Socioeconomic Welfare

The integration of digital technologies has garnered global attention, with a primary focus on their potential to streamline the convergence of digital and non-digital economies. This trend is poised to generate self-employment opportunities and spur socio-economic development, transcending geographic boundaries. In the context of Georgia, where the number of digitally connected individuals is on the rise, it becomes imperative to ascertain the extent to which financial technologies deployed in the financial services industry contribute to the well-being of the population and business representatives. This research aims to assess the benefits of these technologies while acknowledging that their utilization does not impede the future implementation of novel financial innovations by institutions in the sector. While including both, qualitative and quantitative analysis, the study examines the significance of financial technologies in the country's economy in terms of financial resources and the impact on the well-being and growth of the population and companies. Emphasizing user-centricity, it underscores the need to prioritize the fulfillment of users' requirements. Notably, it is not solely traditional financial institutions that shape the landscape, but also technology firms offering innovative products and services, which exert a critical influence on fostering a dynamic business environment. Furthermore, the evaluation of emerging technologies such as cloud computing, the Internet of Things (IoT), artificial intelligence, and blockchain elucidates their potential impact in enhancing the well-being of businesses and the general population. Nevertheless, given the current stage of their development, a comprehensive nationwide implementation of these technologies remains challenging.

Axes of transformation towards Blockchain technology in Islamic financial institutions

This research paper aims to study the axes of the transition towards blockchain technology, how to apply it in Islamic financial institutions, obstacles of actual implementations and the proposed solutions. Islamic financial institutions must keep pace with technological developments, especially with regard to strategic changes, development of work mechanism, performance efficiency, accuracy of operations performance, service speed with cost and security of operations, and the impact of this on the competitiveness of Islamic financial institutions with international and traditional financial institutions, and the impact of all of this on the success and effectiveness of financial institutions. The role of blockchain technology in developing the performance of financial institutions and the huge change in the way of work that has emerged is the importance and severity of the need for technology, especially during the pandemic, for an effective transformation towards blockchain technology considering cases studies is very important to manage the change through the following three main axes: Technology: how to choose the right technology and the right technology partner. Procedures: The development of procedures has a major and effective role in improving and controlling all operations in general, achieving the best productivity, reducing waste of time and money, and controlling better workflow and costs and removing obstacles. Employees: One of the most important factors affecting the application of modern technologies and the success of development and change is the mechanism of work in financial institutions. Keywords: Islamic, Financial, Blockchain, institutions, Transformation.

Изменение социального облика финансового права на рубеже ХХ–ХХI веков

The consolidation of the Russian state as a social state in the Constitution of the Russian Federation required significant changes both in the system of domestic law and in the system of its individual branches. One of the leading industries that bore a significant “burden” to implement the corresponding transformation is financial law, which by that time, as scientists put it, occupied a “modest place” among other industries. The fulfillment of the assigned mission significantly contributed to changing not only the content, but also the role of financial law in the life of society, the state, and the individual. In essence, the social appearance of financial law has changed, which, although it should be social at its core, is not always clearly socially “coloured”. In this regard, the purpose of this study, based on the thesis about the change in the social image of financial law at the turn of the 20th–21st centuries, is to argue for the presence of a social vector in the development of this branch of law as one of the special branches of the Russian legal system. Using historical, logical methods, as well as methods of comparative legal research and system analysis, the basic prerequisites and conditions for the corresponding transformation, as well as its features, are identified using the example of individual sub-sectors and institutions of financial law. The thesis about the implementation in the norms of financial law of the state’s targets for the implementation of plans and forecasts of socio-economic development is substantiated, it is proven that not only traditional financial and legal institutions (budgetary and legal, tax and legal) are involved in the implementation of the social tasks of the state, but also other (institutions of public banking law, money issue). The current financial legislation and individual acts of strategic planning are analyzed, which made it possible to argue the hypothesis that in the last three decades the social appearance of financial law has changed significantly: not only the socialization of financial law itself has occurred (external aspect), but its content has also changed, including changes the composition of its principles, system, subjects (intra-industry aspect).

Impact of Competitive Strategy, Decision Making Style, Innovativeness and Risk Management on Knowledge Management Practices

This study fills an urgent gap in need of a complete picture of the complicated relationships between organizational traits and Knowledge Management approaches amid Lahore's traditional financial institutions, Pakistan. This research relates to studying how risk management, innovation strategies or decision-making styles affect the knowledge environment within these firms. This paper adopts a positivist philosophy for research and is combined with the use of quantitative methods. Smart PLS software is used to perform Structural Equation Modeling (SEM) on the data obtained. Responses came from a sample of 380 bank managers, comprising the dataset used for analysis. These results suggest that there are some areas in which organizational interventions aimed at knowledge management could be especially effective (e.g., the strong and reliable positive relationships between insights into how organizations use information, competitive strategy, decision-making styles, innovativeness, and risk management). The following results, through verifying and elaborating upon these existing conceptual frameworks while at the same time providing practical applicability for participants in this specific field of study, also serve to add depth theory side of knowledge management. This will provide us with a better understanding of Knowledge Management processes in many kinds of organizations. Because this research makes use of cross-sectional data, the capacity to establish causal relationships between variables is limited. It is a key study for organizations, employees, executives, and policy makers.

Analysis of Collaboration Between Rural Banks and Fintech Lending

Fintech Lending or Information Technology-Based Joint Funding Services (LPBBTI) is a form of technological innovation in financial services that provides new alternatives for people to get access to loans in an easy and fast way. Fintech lending provides loans to individuals and businessmen who previously had difficulty obtaining loans from traditional financial institutions. The fintech lending industry enters the same market as banking to serve the community so that they can compete or collaborate with each other. Fintech lending and banks have their own characteristics and advantages so they have the potential to provide added value and reduce risk. The aim of this research is to analyze whether collaboration between Rural Banks (BPR) and fintech lending can be mutually beneficial and an optimal form of collaboration. This research was conducted from a case study of PT Duha Madani Syariah as a fintech lending provider in collaboration with 4 (four) BPRs. The research method used a qualitative approach. Data collected through observation, interviews, documentation, and triangulation techniques. The research results show that the collaboration between BPR and fintech lending is mutually beneficial for the parties because it increases loan disbursement, creates company operational efficiency, and increases company profits. This collaboration is outlined in a cooperation agreement which regulates the scope of mutually beneficial cooperation, and requires support from regulators through policies or implementing instructions to accelerate and improve collaboration between BPR and fintech lending

Understanding CDFI Financial Data: A Primer for New Investors

Community Development Financial Institutions (CDFIs) are gaining broader recognition as effective conduits of capital to underserved communities. As a result of the diversity of CDFI business models and their unique approach to blending different capital sources, these mission-driven capital providers have varied and often complex financial structures, and their financial statements can be difficult to understand for those not familiar with the sector. As interest in the sector from prospective investors has grown, so too has the need for broader understanding of how to assess CDFI financial health and soundness. This brief highlights sector dynamics that provide important context for any analysis of individual CDFIs, and shares suggestions for both the CDFI industry and investors new to the sector for how to improve understanding of CDFI financial metrics. Key takeaways • CDFI loan funds are unique entities relative to other financial institutions, and measures of financial health typically used for traditional financial institutions often do not readily map onto the CDFI sector. • Heterogeneity in the sector makes CDFI loan funds difficult to assess at an industry level; institution-level evaluations are likely to be more fruitful. • Efforts around standardization of financials have been undertaken by the sector itself in the past but more can be done (both by CDFIs and investors) to increase the understanding of CDFI loan fund financial data by mainstream financial actors

Research on the Relationship and Application of Cryptocurrency and Blockchain

This research paper discusses virtual currency and the blockchain technology that underpins it. Virtual money, frequently referred to cryptocurrency, is a digital method of payment that is not regulated by traditional financial institutions. It enables individuals to perform peer-to-peer transactions in a secure and efficient manner by using encrypted digital records. Cryptocurrencies like Bitcoin and Ethereum have garnered popularity due to their promise to transform financial institutions by enabling international and decentralized payments. Blockchain technology facilitates the operation of virtual currency. A blockchain is an immutable and decentralized digital ledger which keeps track of every single transaction in an easily accessible and tamper-resistant manner. Each transaction is organized into a block and linked to the one before it, forming a chain of blocks. This paper explores virtual currency and its foundation, blockchain technology. Cryptocurrency, a digital payment method, enables secure peer-to-peer transactions without traditional financial oversight. Prominent examples like Bitcoin and Ethereum offer potential for global and decentralized payments. Blockchain, an immutable digital ledger, supports virtual currency, recording tamper-resistant transactions in linked blocks.

Evaluating the impact of uncertainty and risk on the operational efficiency of credit business of commercial banks in China based on dynamic network DEA and Malmquist Index Model

There's a lot of uncertainty in the global financial system due to trade, political, and unforeseen issues. There are dangers and uncertainties in China's domestic financial market due to the ongoing effect of the global economic climate and the impact of the new coronavirus pandemic. Nonetheless, the conventional financial sector, which is controlled by commercial banks, continues to have a dominant position in China's financial system, with the traditional credit business model serving as its primary business model. As a result, the primary subject of this essay is commercial banks, a common kind of financial organization. The combination of the Malmquist Index Model with the new network DEA model takes into account the real circumstances faced by Chinese commercial banks. The three phases of the credit business operation process of commercial banks are capital buildup, loan issuing, and profit generation. To observe the effects of recent domestic market uncertainties and the high risk of emergencies like the epidemic on traditional financial institutions dominated by banks, this paper measures the efficiency of credit business of 26 listed banks in China from 2016 to 2022 and analyzes the operational efficiency of credit business of Chinese commercial banks from both static and dynamic perspectives. As a result, Chinese commercial banks and other established financial institutions are better equipped to reduce risks and uncertainties and support the steady growth of the country's financial sector.

Analysis and Countermeasures to Alleviate the Financing Constraints of Small and Medium-Sized Enterprises

Purpose - Small and medium-sized enterprises are an important component of China’s national economy, but their financing channels are constrained by many factors. With the rapid development of financial technology, they have shown enormous potential in the field of financing for small and medium-sized enterprises. This study aims to analyze how fintech can alleviate financing constraints faced by small and medium-sized enterprises, and propose corresponding countermeasures. Through analysis and research, it has been found that financial technology has effectively expanded the financing channels of small and medium-sized enterprises by improving the accessibility of financial services, reducing transaction costs, and improving risk management capabilities. However, technical risks, regulatory uncertainty, and the financial transparency of the enterprise itself remain the main factors that constrain its development. To this end, constructive countermeasures and suggestions are proposed
 Design/Methodology/Approach - Based on the technical basis of fintech, this paper studies the problem of fintech alleviating the financing constraints of small and medium-sized enterprises.
 Findings - This paper studies mainly analyzes the mechanism of fintech alleviating financing constraints.
 Research Implications - Suggest strengthening the construction of financial technology regulatory framework, improving the internal financial management level of small and medium-sized enterprises, and promoting the coordinated development of financial technology and traditional financial institutions, in order to further release the positive role of financial technology in alleviating financing constraints for small and medium-sized enterprises.