The digital public infrastructure nexus: how Fintech platforms are reshaping state–bank–citizen relationships in welfare transfers

Purpose This paper aims to investigate the “Digital Public Infrastructure (DPI) nexus,” which is a transformative framework where state-led digital platforms reshape relationships between governments, banks and citizens in welfare transfers. It also aims to test the hypothesis that DPI and the banking sector have a synergistic, rather than substitutive, effect on improving welfare outcomes in developing economies. Design/methodology/approach The authors use a panel autoregressive distributed lag (ARDL) model on an unbalanced panel of 45 developing economies from 2005 to 2023. This methodology is chosen to disentangle the short-run dynamics from the long-run equilibrium relationship between DPI, banking sector depth and welfare metrics like poverty and inequality. Findings The results confirm a significant long-run cointegrating relationship. Crucially, the interaction between DPI and banking depth is negative and significant, demonstrating a synergistic effect on poverty reduction. This reveals that the welfare impact of DPI is substantially amplified by a deeper banking sector, confirming the core DPI nexus hypothesis. Research limitations/implications The primary limitation is the use of a composite index for DPI, which may not capture all qualitative governance aspects. Future research should use granular data on DPI design and bank-level strategies. The findings imply that policymakers must invest in interoperable DPI while fostering a complementary banking sector. Originality/value To the best of the authors’ knowledge, this study provides the first empirical evidence of the DPI nexus. Its value lies in theoretically reframing the state as an ecosystem orchestrator and banks as evolved intermediaries, and methodologically introducing the panel ARDL model to this literature, offering a dynamic perspective on digital transformation.