FinTech Adoption and Financial Inclusion in the United Kingdom: A 34-Year Econometric Assessment of Digitalisation Before and After the COVID-19 Pandemic

Iyanu Emmanuel Olatunbosun and Abosede Rebecca Olatunbosun

SAP Southern Studies, 2025

Abstract: Introduction: Financial technology (FinTech) innovations have transformed financial access globally, yet their impact on financial inclusion in advanced economies remains understudied. The United Kingdom provides a critical case study given its position as a global FinTech hub and rapid digital banking adoption accelerated by COVID-19.Objective: This study investigates the effect of FinTech adoption on financial inclusion in the UK over 1990-2024, examining pre- and post-pandemic dynamics and the moderating roles of internet penetration and macroeconomic conditions.Methods: Using secondary data from the Financial Conduct Authority, World Bank, and national surveys, the study applies Generalized Method of Moments (GMM) estimation to address endogeneity. The baseline model (LOGFI_t = β0 + β1LOGFA_t + β2LOGGDPC_t + β3LOGIP_t + β4LOGCPI_t + εi) evaluates short- and long-run relationships among financial inclusion (LOGFI), FinTech adoption (LOGFA), GDP per capita (LOGGDPC), internet penetration (LOGIP), and consumer price index (LOGCPI).Results: FinTech adoption exhibits positive but statistically insignificant effects on financial inclusion (coef=0.002461, p=0.1486). Internet penetration significantly enhances inclusion (coef=0.002584, p=0.0043), while higher GDP per capita unexpectedly reduces formal financial participation (coef=-0.054067, p=0.0036). Inflation shows negative but insignificant effects (p=0.1753). Model diagnostics confirm robustness (R²=0.9936, J-statistic=0.0000).Conclusions: Digital infrastructure rather than FinTech adoption drives UK financial inclusion. Policymakers should prioritize nationwide connectivity and address why higher incomes correlate with reduced formal banking participation, suggesting shifts toward alternative financial assets among wealthier cohorts.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:cwf:ssarti:ss202539

DOI: 10.62486/ss202539

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