Effect of Financial Technology on the Financial Performance of Selected Banks in India

Abstract

Banks and other financial organisations have embraced the use of financial technology in their day-to-day operations. This has encouraged efficiency in banking operations, enabling cost reductions through the use of the Internet and electronic payments, among other things. The quality of services provided by banks around the world has consequently improved. Evidence demonstrates that development professionals consistently believe that the outreach brought about by Fintech will improve banks’ financial performance. The independent variable for the study was financial technology operationalised as service banking, mobile banking, Internet banking, and ATMs. The control variables were economic growth represented by economic growth rate, exchange rate represented by the Indian Rupee, and interest rates measured as the average bank lending rate on a quarterly basis. The dependent variable was financial performance of the banking industry scaled as ROA. A period of five years, between April 2018 and March 2022, was studied through the gathering of secondary data. Descriptive research design was assumed, while multiple linear regressions model was applicable in the analysis of the relationship between the variables. The data was analysed by the application of SPSS version 23. The study constitutes that relinquishment of mobile banking, online or Internet banking, and agency banking impacted the financial performance of banks positively. The study concluded that banks should invest in financial technology to upgrade their operational efficiency and persuasiveness. The study also recommends that banks should mobilise their customers to adopt these technologies, as well as channel resources for the enhancement of technological infrastructure. Banks should also adopt further agency networks, as this widens their customer base, especially in the rural areas. It is the recommendation of this study that measures ought to be adopted that will enhance Internet banking, economic growth rate, and interest rate, as these measures have a substantial influence on the performance of the banking industry in India.

Keywords: Fintech, Financial Performance, Internet Banking

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