FinTech Adoption Strategies and Their Impact on Financial Performance and Risk Management in GlobalFinancial Markets

Abstract

Financial technology has contributed to the structural changes in banking, driving the speed of change in how intermediation, risk and operational efficiency are managed across the banking sector. Although a body of empirical research has explored these changes, conclusions have been mixed on the positive impact of technology on the financial outcomes of companies and on the presence of unique risks. This paper is a structured evidence synthesis of 11 recent studies, to investigate the link between adoption of FinTech, financial performance and risk management across global markets. The synthesized evidence shows that internal technology integration provides positive quantitative results, such as accelerating mortgage processing times by up to 20% without a corresponding increase in loan default rates, reducing non-performing loans (NPLs) by 10% for every one standard deviation of the technology adoption, and expanding profitability including a 9.10% increase in return on assets (ROA), an 18.87% increase in return on equity (ROE), and a 7.98% increase in net interest margin (NIM). A comparison, however, of regional results shows that results are critically dependent on the market context, the capital position, and regulatory conditions. The analysis provides a synthesis of existing divergent literature and identifies internal digital capabilities and external competitive factors, leading to an action-oriented risk management and supervisory approach.