Fintech integration and the risk–return trade-off in the Indian banking sector

Purpose The study investigates how financial technology integration influences the banking performance in India, with the mediating effect of bank risk-taking. Motivated by the rapid rise of fintech and its potential to reshape financial intermediation. Design/methodology/approach Using panel data from the Nifty-listed banks over 2015–2023, we estimate a fixed-effects model and apply Baron and Kenny's mediation framework to test the hypothesized relationship. Quantile regression is employed to assess robustness across performance distributions, and structural equation modeling (SEM) further validates the mediation paths. Findings Fintech integration significantly improves bank performance, with risk-taking partially mediating this effect. Across all quantiles, greater fintech adoption is associated with reduced risk-taking by banks and enhanced profitability, underscoring its role as a driver of efficiency, competitiveness and stability. Practical implications The findings offer actionable insights for regulators and practitioners. Strategic fintech integration coupled with prudent risk management can strengthen intermediation efficiency, boost competitiveness and support sustainable profitability in the Indian banking sector. Originality/value By jointly modeling fintech integration, bank risk-taking and bank performance, the study advances the financial intermediation literature with a novel mediation perspective in an emerging market context. This study offers valuable policy recommendations for integrating fintech into the core operational activities of the banks to enhance their performance by managing risk.