Consumer Trust and Innovation in Fintech: a Study on Digital Banking Adoption

In this study, factors of adoption of digital banking in Pakistan’s FinTech sector (i.e. consumer trust and perceived risk; technological innovation) are analyzed. The research is grounded upon the UTAUT2 and the Technology Acceptance Model to identify key determinants for shaping of the behavioral intentions (BI) towards the digital banking. The research design used in this Ph.D. thesis was quantitative, cross sectional using data from digital banking users which then used Structural Equation Modeling (SEM) to analyze the collected data. The results demonstrate that Perceived Usefulness (PU) (β = 0.63) plays a significant role in BI, supporting TAM’s main postulates, while Perceived Risk (PR) (β = 1.03) contradicts the extant risk theories by being positively related to BI. Still, the statistical insignificance of Performance Expectancy (PE), Trust (TR), and Social Influence (SI) indicates a replacement of classic adoption factors with a focus on security awareness and grassroots goodness. In this regard, this study makes theoretical contribution by developing adopting models that take on evolving FinTech dynamics. It empirically expands the literature by showing that the risk perception of digital banking consumers, introduction of innovation, and the app’s usability are related in affecting digital banking adoption in emerging markets. From a practical point of view, they should improve AI based security features, usability and transparent communication of risks to increase consumer trust. There is also future research that can be done in longitudinal trends, AI personalization and regulations in different markets. However, the study has limitations in geographic scope, as well as in methodological approach and proposes qualitative and experimental research to improve generalizability.