Advancing in the Change Journey Towards FinTech: The Nexus between Fintech and Financial Performance of Commercial Banks in Pakistan

Abstract

FinTech companies' involvement in Pakistan's banking industry is essential to improving the country's traditional financial system. This study uses data from the banking industry in Pakistan from 2018 to 2022 to investigate how financial technology (FinTech) affects bank performance. Regression analysis with a data panel fixed effect model is used in this investigation. The Capital Adequacy Ratio (CAR), Net Interest Margin (NIM), Gross Non-Performing Loans (NPL), Return on Equity (ROE), Return on Assets (ROA), and Loans Deposit Ratio (LDR) are among the financial variables that are quantified in this study. In the context of FinTech, inflation and the GDP are control variables. The findings reveal that the financial variables, including NPLgross, CAR, ROA, LDR (Loan-to-Deposit Ratio), ROE, and inflation have a statistically significant influence on FinTech. Furthermore, FinTech is insignificantly influenced by NIM, as well as control variable GDP. This illustrates how Pakistani banks can benefit from forming alliances with FinTech companies in order to improve the financial system and maximize the profits that emerge from such cooperation.