The impact of Financial Technology Innovation on Bank’s Financial Performance: Evidence from Egypt

نوع المستند : تجاریة کل ما یتعلق بالعلوم التجاریة

المؤلف

School of Management and Technology, Arab Academy for Science, Technology & Maritime Transport (AAST),

المستخلص

Purpose: Financial technology is now critical for each firm to ease and simplify commercial transactions. Due to the ongoing global debate regarding the relationship between FinTech and banks, including developing countries, the purpose of this study is to examine the efficiency of the banks in Egypt after the spread of FinTech.

Design/Methodology/Approach: This study investigates the impact of bank-level Financial Technology (FinTech) innovations on banks’ performance in Egypt. The shortage of studies in this field in Egypt is presented as the paper's concern. Financial statement data were used for a period from 2018-2022 from the CBE Egyptian bank with FinTech collaborations. Annual data of banks listed in EGX100 has been utilized to achieve this objective. Two alternative models with different combinations were developed, based on bank profitability, and bank stock returns to evaluate the banks' efficiency using SEM technique.

Findings: A key finding of this study is the presence of a simultaneous positive change and causality between FinTech and bank stock returns. Furthermore, several other interesting findings were discovered: (1) the causal relationship from FinTech to bank profitability is insignificant. (2) Insignificant causality exists between different types of FinTech, such as influence from DigPayment to FinProfitability, from DigPayment to BankReturn, from FinInc to FinProfitability, from FinInc to BankReturn; and (3) there is an equal occurrence of simultaneous increase between certain types of FinTech and bank stock returns, specifically between NeoBank and BankReturn, as well as TrsAcc and BankReturn.

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