The Influence of Fintech Growth on the Performance of Conventional Banks, Islamic Banks, and Rural Banks in Indonesia

Rino Dwi Putra (), Dini Wahjoe Hapsari, Dian Indah Hayati, Intan Nurbaiti Fawziah and Jaja Muhammad Zakaria
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Rino Dwi Putra: Universitas Negeri Padang
Dini Wahjoe Hapsari: Universitas Telkom
Dian Indah Hayati: Universitas Negeri Padang
Intan Nurbaiti Fawziah: Universitas Negeri Padang
Jaja Muhammad Zakaria: Universitas Singaperbangsa Karawang

A chapter in Proceedings of the 10th Padang International Conference on Education, Economics, Business and Accounting (PICEEBA-10 2022), 2025, pp 167-181 from Springer

Abstract: Abstract Since the growth of fintechs promises more inclusive financial access, they impact the financial industry. This research focused on analyzing the impact of fintech growth on the financial sector’s performance in Indonesia. The financial industry faced increasingly aggressive competition with the emergence of various fintech services as substitutes or complements, potentially affecting their financial performance. This performance is typically measured by profits, efficiency (measured by the BOPO ratio), and Non-Performing Loan (measured by the NPL ratio). The research employed the Smart PLS analysis technique, a rigorous verification method, to test the model structurally. It focused on the performance of fintech P2P lending companies, conventional banks, sharia banks, and rural banks (Bank Perkreditan Rakyat or BPR) in Indonesia between 2021 and 2023 as the unit of analysis and observation, ensuring a comprehensive and reliable study. This research finds that fintech performance significantly negatively influences the performance of Sharia banks in Indonesia due to their relative similarity in market share. Besides, a significant negative influence on the performance of rural banks occurs because fintech products, such as peer-to-peer lending and digital payment services, are technologically different but still become close substitutes for rural bank products. Lastly, an insignificant negative influence on the performance of commercial banks arises because their scale and scope are higher than the fintech ones. As a result, many fintech companies collaborate with commercial banks.

Keywords: Fintech; Smart PLS; ROA; BOPO; Non-Performing Loan (search for similar items in EconPapers)
Date: 2025
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DOI: 10.2991/978-94-6463-839-4_16

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