The Impact of Fintech Innovations on Traditional Banking Systems

Abstract

Purpose: This study sought to explore the impact of fintech innovations on traditional banking systems. Methodology: The study adopted a desktop research methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive’s time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library. Findings: The findings reveal that there exists a contextual and methodological gap relating to the impact of fintech innovations on traditional banking systems. Preliminary empirical review revealed that fintech innovations had significantly transformed the financial industry, presenting both opportunities and challenges for traditional banking systems. It revealed that while fintech solutions enhanced operational efficiencies and customer satisfaction, traditional banks needed to adopt strategic planning and agile adaptation to maintain their competitiveness. The study highlighted the importance of collaboration between fintech firms and traditional banks, emphasizing the need for a balanced regulatory approach to foster innovation while ensuring financial stability. Unique Contribution to Theory, Practice and Policy: The Disruptive Innovation Theory, Diffusion of Innovations Theory and the Resource Based View Theory may be used to anchor future studies on fintech innovations on traditional banking systems. The study recommended that traditional banks embrace digital transformation by investing in technology infrastructure, fostering innovation, and upskilling employees. It suggested forming strategic partnerships with fintech firms to leverage technological advancements and enhance competitiveness. The study also advised policymakers to update regulatory frameworks to support innovation and maintain financial stability, while promoting financial literacy and inclusion. Lastly, it called for continuous dialogue and collaboration among all stakeholders to address challenges and seize opportunities presented by fintech innovations.