Application of Financial Technology on the Performance of Banks

Fajra Octrina, Jihan Eliza (), Andrieta Shintia Dewi and Almi Jamilah
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Fajra Octrina: Telkom University, School of Economics and Business
Jihan Eliza: Telkom University, School of Economics and Business
Andrieta Shintia Dewi: Telkom University, School of Economics and Business
Almi Jamilah: Telkom University, School of Economics and Business

A chapter in Proceedings of the International Conference on Sustainable Collaboration in Business, Technology, Information, and Innovation (SCBTII 2024), 2024, pp 239-256 from Springer

Abstract: Abstract This study investigates the influence of financial technology (FinTech) on the performance of banks, specifically examining Peer-to-Peer Lending (P2P) and Digital Payments (PAY) in relation to Return on Equity (ROE). FinTech innovations are rapidly transforming financial services. Although previous research has explored FinTech’s impact on financial performance, comprehensive analyses focusing on Indonesian commercial banks are lacking. This paper examines how P2P Lending and Digital Payments influence the ROE of these banks. This study analyzes secondary data from Indonesian commercial banks’ annual and financial reports (KBMI 3 and 4) from 2018 to 2022. Panel data regression models are employed for analysis. The results find that FinTech, along with control variables such as Concentration Ratio, Firm Size, Loan-to-Deposit Ratio, Capital Adequacy Ratio, Inflation, and Gross Domestic Product, impacts banking performance. Both P2P Lending and Digital Payments show a positive correlation with ROE. FinTech innovations are essential for enhancing the performance of commercial banks. These findings underscore the importance of integrating FinTech into banking strategies for sustainable growth and competitive advantage.

Keywords: Banking; Digital Payment; Financial Technology; Peer-to-Peer Lending; Performance (search for similar items in EconPapers)
Date: 2024
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DOI: 10.2991/978-94-6463-558-4_14

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