Fintech startups are implementing the new technologies, thus, compelling the traditional banks to transform their business models, which is potentially a dangerous game in the financial world. Banks cooperate with fintech startups to improve their technological base and become competitive. This paper examines the link between commercial banks’ performance in Türkiye and fintech partnerships from 2013 to 2021. How Fintech is Reshaping Banking is analyzed using the GMM One-Step System model, which varies by bank size and performance indicators.
First, results are that the engagements between commercial banks and fintech companies influence positively ROE of a bank only when dealing with large-sized traditional banks, and thus, there is a possible supplementary impact. The other important impact suggests that the fintech growth adversely affects the ROA and ROE of large-scale banks, which indicates that there is some fintech service and products that can replace the traditional banks. The paper examines the role of the collaboration between commercial banks and fintech companies in the bank performance with the data of Tmrkiye during 2013-2021.
The Financial System Gets a Fintech Disruption
The conclusion points to a complex image. In the case of large-scale traditional banks, a relationship with the fintech firms seems to enhance the return on equity (ROE) implying that such partnerships can complement their current business processes. The general fintech development in the industry, however, seems to have the adverse effect on the return on assets (ROA) and the ROE within large banks. This is a pointer that certain fintech products and services are replacing conventional banking operations, hence favoring profitability.
It aids in making it clear that in as much as a collaboration with a fintech firm can foster improvements in the particular performance measure, it can also jeopardize the conventional revenue channels. This fact can help the banks in their quest to balance adoption of technological advancements alongside protection of their central activities.
Fintech’s Impact on the World of Business
To start with, fintech firms have a chance of reaching out to risky small sized customers who can be reached through new channels of service which tend to be uncovered by usual incumbent banks. Through the application of new technology, fintech companies assess the risks of borrowers at a lower price than is done in conventional banks (Hayashi, Citation2016). Secondly, banks can purchase the companies that deal with fintech, hence.
It would be challenging to identify how fintechs directly affect bank performance. As a case in point, following Capital One acquisition of Level Money, it made the latter a member of a digital innovation team at Capital One. Finally, the complementary and the substitution effects may cancel each other.
What Are Some Current Dynamics Affecting the Fintech Industry?
As this paper will explore, the researchers will be able to draw on the conceptual framework in the present study to unearth the impact of bank fintech collaborations on the performance of the traditional banking sector in T urkiye between the year 2013 and 2021. The explanation of the choice of Turkiye is related primarily to the fact that Tfuriye has a youthful and tech-savvy population that manifest an expanding fintech market, 117.8 million credit cards and 106.6 million active online banking users. The country has credit card transactions ranked 5 th in the world, underpinning innovation with 696 fintech firms.
Including 81 payment institution licenses. The volume of contactless payments through mobiles has exploded where it recorded 50.5 million payments as the financial establishments seek to invest in the startups, in order to drive traction. The next one is the selection of the sample period. In the heady times of the early 2010s, Türkiye came up with the regulations concerning fintech companies. The mandatory introduction of the new generation payment devices in 2012 led to the fact that fintech initiatives began to increase massively across the country.
Conclusion
At least to our knowledge, the current research paper represents the first attempt to provide the quantitative analysis of the effect of collaborations on the performance of banks in T Philvariant: P Philspirminus N plural, support The fintech ecosystem in Tlk has expanded greatly over the past several years, and this analysis.
Thus becomes very applicable to the effect that such trends have on traditional banks. Compared to most of the literature, including the one by Li et al. (Citation 2017), engaged in studying the developed market, the given paper throws light on one of the most important emerging markets, where the process of fintech penetration and banking tends to develop concurrently. Comparing to the current literature, where the disruption of Vives (2019) or the cooperation as suggested by Frederica et al.
