ESG PRESSURES IN BANK AND FINTECH LENDING: STRUCTURAL SHIFTS AND FINANCIAL INCLUSION OUTCOMES

This paper examines how ESG pressures are reshaping lending practices in banks and FinTech firms, driving structural shifts that influence financial inclusion. Drawing on recent empirical and theoretical evidence, the study analyzes how ESG criteria are embedded in credit allocation and how adoption differs between traditional banks and FinTech lenders. Banks integrate ESG primarily through formal risk-assessment models and regulatory compliance, whereas FinTechs rely on technological innovation, data analytics, and alternative scoring methods. These differences produce distinct outcomes: banks improve inclusion indirectly via transparency and risk management, while FinTechs extend credit more directly to underserved populations. Nonetheless, reliance on algorithmic models raises concerns regarding fairness, bias, and ESG consistency. The findings highlight ESG as a transformative force in lending, with its effectiveness in promoting sustainable and inclusive finance contingent on the interplay between regulatory frameworks and technological capabilities.