FINTECH ADOPTION, BUSINESS DIVERSIFICATION, AND BANK PERFORMANCE: EVIDENCE FROM COMMERCIAL BANKS IN EMERGING ECONOMIES

Abstract

This investigation explores the extent to which FinTech implementation and business diversification affect banking performance within emerging markets, where accelerating digital innovation continues to transform the delivery of financial services. The study seeks to evaluate the individual impacts of FinTech adoption and diversification, together with their combined influence, on organisational performance. Employing a quantitative explanatory approach, the research utilises panel data derived from 30 banks across a ten-year period (2014–2023), with empirical assessment conducted through Fixed Effects and Random Effects estimations. The findings reveal that both FinTech implementation (β = 0.761, p < 0.01) and business diversification (β = 0.746, p < 0.01) exert statistically significant positive effects on performance. The explanatory model accounts for 83.35% of the observed variance (R² = 0.8335). However, the interaction between the two variables does not demonstrate statistical significance. The study therefore determines that FinTech adoption and diversification operate as separate mechanisms enhancing banking performance. Accordingly, it advocates the systematic incorporation of digital innovations alongside carefully managed diversification strategies. Although the findings provide valuable theoretical and practical insights, their generalisability is constrained by reliance on simulated data and the relatively limited sample size.