Banks with Higher Levels of Fintech Adoption Exhibit Better Financial ‎Performance Than Those with Lower Levels of Adoption

  • Authors

    • Mr. Som Shekhar Verma Research Scholar, Department of Management Studies, Maulana Azad National Institute of ‎ Technology Bhopal, MP-462003, Madhya Pradesh, India
    • Dr. Nenavath Sreenu Associate Professor, Department of Management Studies, Maulana Azad National Institute of ‎Technology Bhopal, MP-462003, Madhya Pradesh, India
    • Dr. Gyaneshwar Singh Kushwaha Associate Professor, Department of Management Studies, Maulana Azad National Institute of ‎Technology Bhopal, MP-462003, Madhya Pradesh, India
    https://doi.org/10.14419/jkdnj577

    Received date: July 16, 2025

    Accepted date: August 8, 2025

    Published date: October 20, 2025

  • Fintech Adoption; Banking Performance; Return on Assets (ROA); Generalized Method of ‎Moments (GMM); Financial Technology; Digital Banking; India.

  • Abstract

    This study examines the impact of FinTech adoption on the financial performance of ‎commercial banks in India, with a particular focus on Return on Assets (ROA) as a primary ‎indicator of profitability. Drawing on a comprehensive panel dataset of Indian commercial ‎banks from 2012 to 2022, the research employs advanced econometric techniques—including ‎fixed effects, random effects, and dynamic panel models (Difference and System Generalized ‎Method of Moments)—to address endogeneity and capture both short-term and long-term ‎effects. The findings reveal that while higher levels of FinTech adoption are associated with an ‎initial, statistically significant decline in ROA—reflecting the transitional costs and operational ‎challenges of digital integration—banks with greater scale are better positioned to absorb these ‎short-term impacts and achieve superior financial outcomes over time. Traditional drivers such ‎as loan and deposit growth do not significantly influence ROA in the digital era, highlighting ‎the evolving determinants of banking success. The study validates Schumpeter’s Innovation ‎Theory and the Technology Acceptance Model, underscoring the need for strategic planning ‎and gradual implementation of FinTech solutions. Practical implications include ‎recommendations for regulatory support, digital literacy enhancement, and tailored financial ‎incentives to facilitate smoother digital transformation, particularly for smaller banks. This ‎research contributes novel empirical evidence to the limited literature on FinTech and bank ‎profitability in emerging markets and offers actionable insights for banking professionals, ‎policymakers, and financial regulators navigating the digital age‎.

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    Verma , M. S. S. ., Sreenu , D. N. ., & Kushwaha , D. G. S. . (2025). Banks with Higher Levels of Fintech Adoption Exhibit Better Financial ‎Performance Than Those with Lower Levels of Adoption. International Journal of Accounting and Economics Studies, 12(6), 774-784. https://doi.org/10.14419/jkdnj577