Impact of Fintech on The Financial Performance of Pakistani Banking Sector: A Comparative Study of Islamic and Conventional Banks

FinTech is a developing technology which primarily changed the way of banking. The association between banks and FinTech got the attention of many scholars. In this regard, the present research aimed to investigate the influence of financial technology on the Pakistani banking sector’s financial performance including both Islamic and non-Islamic banks for tenure of 5 years comprising of 2018-2022. Four Islamic banks and all the conventional banks except micro finance banks were chosen as a sample for this study. The analysis of the present research is grounded on the independent variable Fintech (Internet banking, Mobile banking and ATM transactions) and the dependent variable financial performance (ROA, ROE and EPS) of both banking systems. The researcher collected quantitative data as per the quantifiable nature of the study from the yearly statements of the concerned banks and State Bank of Pakistan website. Linear model regression of panel data was used to derive the empirical outcomes from the analysis of financial technology and banks’ fiscal performance. The outcomes of the research resulted that overall Pakistani banking sector’s financial performance was insignificantly impacted by FinTech with reference to ROA and ROE. But individually fiscal performance of Islamic banks has been positively influenced by financial technology while insignificant impact on conventional banks’ financial performance in reference with ROA and ROE. Moreover, the outcomes of the research further resulted that FinTech has positive significant impact on the financial performance of Pakistani banking sector as a whole with respect to EPS. Theoretically, the present study added latest information to the existing literature regarding Pakistani banking sector’s performance in liaison with FinTech. Practically, the present study has dual implications. From customers’ perspective the use of FinTech services creates easiness for clients to avail banking services irrespective of the time and place constraints. While from banks’ perspective the use of FinTech services by customers promotes the agenda of green banking by reducing paperwork in the form of vouchers as well as improves operational efficiency.