## Is FinTech Eating the Bank's Lunch?

_IMF Working Papers, November 17, 2023_

## Source details

**Canonical URL:** [Is FinTech Eating the Bank's Lunch?](https://www.imf.org/en/publications/wp/issues/2023/11/18/is-fintech-eating-the-bank-s-lunch-540817)

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## Bibliographic details
- Authors: Sami Ben Naceur, Bertrand Candelon, Selim A Elekdag, Drilona Emrullahu
- Published: November 17, 2023
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400258107.001

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### Summary and central findings
- The paper examines how the growing presence of FinTech firms affects the performance of traditional financial institutions.
- Main finding: FinTech presence has a negative impact on bank profitability.
- Mechanisms identified:
  - Reduction in interest income.
  - Rise in operational costs.
- Diversification efforts by established financial institutions have been inadequate to offset losses from increased competition with FinTech firms.

### Heterogeneous effects by FinTech business model and bank type
- FinTech business models considered include Peer-to-Peer (P2P) lending and Balance Sheet lending.
- Effects by bank type:
  - Cooperative banks: experience more significant profit deterioration under both P2P and Balance Sheet lending models.
  - Commercial banks (larger): appear to benefit from partnerships with P2P platforms, shown by an increase in non-interest income.

### Cross-country and regulatory heterogeneity
- The adverse effect of FinTech presence on banks is disproportionately larger in countries with more competitive, profitable, and developed financial systems.
- Conversely, traditional financial institutions in countries with stronger regulatory frameworks appear to benefit from the expanding influence of FinTech firms.

### Implications for bank strategy and policy
- Revenue diversification alone has not been sufficient to neutralize the profitability impact from FinTech competition.
- Partnerships between larger commercial banks and P2P platforms can increase non-interest income for those banks.
- Strengthening regulatory frameworks may allow traditional financial institutions to capture benefits from FinTech expansion rather than suffer net losses.

### Publication and document metadata
- Authors: Sami Ben Naceur, Bertrand Candelon, Selim A Elekdag, Drilona Emrullahu
- Date: November 17, 2023
- Series: Working Paper No. 2023/239
- Issue: 239
- Volume: 2023
- Pages: 64
- DOI: https://doi.org/10.5089/9798400258107.001
- Stock No: WPIEA2023239
- ISBN: 9798400258107
- ISSN: 1018-5941
- Citation example included on page: Sami Ben Naceur, Bertrand Candelon, Selim A Elekdag, and Drilona Emrullahu. "Is FinTech Eating the Bank's Lunch?", IMF Working Papers 2023, 239 (2023), accessed 9/16/2026, https://doi.org/10.5089/9798400258107.001

*Source: IMF Working Paper landing page "Is FinTech Eating the Bank's Lunch?"*

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## Content in this bundle

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_Source: https://www.imf.org/en/publications/wp/issues/2023/11/18/is-fintech-eating-the-bank-s-lunch-540817_