EFFECTS OF FINANCIAL TECHNOLOGY ON THE FINANCIAL PERFORMANCE OF BANKS: EVIDENCE FROM SELECTED COMMERCIAL BANKS IN ETHIOPIA

Abstract Financial technology is provided as a new form of monetary service traded that merges<br> information technology with fiscal service similar to payments, remittance, and also the<br> management of assets. The purpose of this study is to investigate the effect of financial<br> technology (automated teller machine, mobile banking, Internet Banking, point of sale terminals,<br> debit cards and networked bank branch) on the financial performance of commercial banks in<br> Ethiopia. To achieve this objective explanatory research design with a quantitative approach<br> was used. The study fully employed secondary data from the period 2013-2022. Collected data<br> from purposively selected 13 privately owned commercial banks audited financial statement and<br> by using STATA software packages analyzed through descriptive statistics and regression<br> analysis methods. The study employed a random-effect model as confirmed by the Hausman test.<br> . The study found that point of sale terminals (β =5.14e7 prob. = 0.013), and number of internet<br> Banking NIB (β =2.22e13 prob. = 0.051). Whereas, mobile banking (β = -1.56e13 prob. =<br> 0.052) and networked bank branch (β = -5.29e06 prob. = 0.004) has a negative and statistically<br> significant effect on Commercial banks’ financial performance. On the other hand, automated<br> teller machine (β= -3.74e07 prob. = 0.456) and debit card (β = -4.38e13 prob. = 0.241) was<br> found to be negative and statistically insignificant. Based on the findings of the study, it is safe to<br> conclude that financial technology has a significant effect on the financial performance of<br> commercial banks in Ethiopia.