The Impact of the Development of Financial Technologies on Bank Risks

U. Kanen, Aisulu Dzhanegizova

Qainar Journal of Social Science, 2025

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DOI 10.58732/2958-7212-2025-1-6-17
Data confidence 70 medium
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Abstract

Today, the development of financial technologies (hereinafter referred – FinTech) has a transformative impact on the banking sector, creating both new opportunities and risks. The purpose of this study is to assess the impact of FinTech development on banking risks, in particular on the share of non-performing loans (NPL Ratio) as a key indicator of credit risk. Based on panel data for 2019-2023. A multiple regression analysis was performed, including banking indicators such as the capital adequacy ratio, liquidity coverage ratio, loan-to-deposit ratio, as well as macroeconomic indicators (GDP growth and unemployment rate). Empirical results have shown that the introduction of FinTech significantly reduces the proportion of nonperforming loans, reflecting improved credit risk management through improved data analytics, borrower assessment, and business process optimization. The ratio of loans to deposits has a statistically significant negative relationship with the NPL index (β = -0.0308, p = 0.027), which underlines the importance of a balanced credit policy. At the same time, macroeconomic factors, including GDP growth and unemployment, did not have a statistically significant impact. The findings confirm the potential of FinTech in reducing traditional banking risks while simultaneously facing new regulatory and operational challenges, which is important to consider when developing strategies to ensure financial stability in the context of digitalization. This research contributes to a growing number of scientific papers devoted to the transformational role of FinTech in the banking industry.