Impact of FinTech Adoption on Financial Inclusion among Small and Medium Enterprises in Sri Lanka: A Mediated Moderation Analysis of Digital Financial Literacy and Perceived Regulatory Support

Abstract : Despite the increasing number of available digital financial technologies, the financial inclusion of Small and Medium Enterprises has remained a problem in developing countries, including Sri Lanka. Based on this, the paper assesses various factors influencing the adoption of FinTech as per the Perceived Ease of Use, Perceived Usefulness, Perceived Security, and Trust on the financial inclusion of SMEs in the North Central Province of Sri Lanka, as well as the moderating effects from Digital Financial Literacy and Perceived Regulatory Support. The sample comprised 160 SME owners and managers who were purposively selected to ensure their prior knowledge of FinTech services. Structured questionnaires were used for data collection, while descriptive statistics, correlation, regression analysis, and PROCESS macro for mediation and moderation were performed. The results indicated that all the factors that influence FinTech adoption have a positive significant effect on SMEs financial inclusion: PEOU (β = 0.253, p < 0.01), PU (β = 0.167, p < 0.01), PS (β = 0.422, p < 0.01), and T (β = 0.167, p < 0.01). Nonetheless, DFL at 95% CI = –0.3817 to –0.0309 with an effect = –0.2097 did not have any significant moderating effect, as did PRS, β = –0.0466, p = 0.119. The study concludes that FinTech adoption is indeed a strong driver of financial inclusion, and neither the perceptions of regulatory support nor DFL significantly alter this relationship either positively or negatively. Practical implications of the findings are addressed to the FinTech providers, regulators, and managers of SMEs, since they will be capable of devising friendly and safe digital financial solutions, and further engage the less-than-fully-engaged FinTech platform users, thus pushing the needle on financial inclusion in underbanked areas forward.