Why do banks acquire FinTech? The role of board cultural diversity

Abstract

This paper examines the role of cultural diversity in bank boardrooms for the acquisition of innovation financial technology – or “FinTech” – firms. Using a sample of 808 banks from 2008-18 in 65 countries, we find that culturally diverse boards are more likely to pursue the acquisition of FinTech firms. We also show that bank-, country- and corporate governance-specific characteristics matter for FinTech acquisition. In particular, banks with older and more gender diverse boardrooms are more likely to acquire FinTech firms. Our paper assumes particular relevance for banks seeking to invest in digital technologies and to adapt to the new digital era.