How Do Financial Technology Products Affect Financial Performance? Evidence from Banking Sector

Abstract

The Covid-19 pandemic affects the banking industry in both positive and negative ways. It creates both threats and opportunities for the alliances between banks and financial technology (FinTech). Financial technology means the marriage or combination between finance and technology. The adoption of financial technology in banking industries has led to the expansion of automation and artificial intelligence. As a result, the customers' engagement level has been improved and transaction costs have been decreased. The current paper employs a panel regression model with fixed effects over the period (1990 – 2020). This paper addresses how the adoption of information and communication technology, more precisely, financial technology products, could affect the financial performance of the banking industry in Jordan. The financial technology products include internet, broadband, mobile, automated transfer machines (ATMs), and branches. the results show that financial technology products in the banking sector improve financial performance. In addition, a positive relationship was found between financial technology products and banking system stability.