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Fintech and banking: friends or foes? Evidence from bank–fintech cooperation

Tu Le (Faculty of Finance - Banking, University of Economics and Law, Ho Chi Minh City, Vietnam) (Vietnam National University, Ho Chi Minh City, Vietnam) (International Centre for Economic Analysis (ICEA), Brampton, Canada)
Thanh Ngo (School of Aviation, Massey University, Palmerston, New Zealand) (University of Economics and Business, Vietnam National University, Hanoi, Vietnam)
Dat T. Nguyen (Faculty of Finance - Banking, University of Economics and Law, Ho Chi Minh City, Vietnam) (Vietnam National University, Ho Chi Minh City, Vietnam)
Thuong T.M. Do (Faculty of Finance - Banking, University of Economics and Law, Ho Chi Minh City, Vietnam) (Vietnam National University, Ho Chi Minh City, Vietnam)

International Journal of Bank Marketing

ISSN: 0265-2323

Article publication date: 16 April 2024

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Abstract

Purpose

The financial system has witnessed the substantial growth of financial technology (fintech) firms. One of the strategies that banks have adopted to cope with this emergence is to cooperate with fintech firms. This study empirically investigated whether cooperation between banks and fintech companies would improve banks’ risk-adjusted returns.

Design/methodology/approach

We developed a novel index of bank–fintech cooperation across various fintech sectors. A system generalized method of moments (GMM) was used to examine this relationship using a sample of Vietnamese banks from 2007 to 2019.

Findings

The findings show that the diversity of bank–fintech cooperation across seven sectors tends to enhance banks’ risk-adjusted returns. The results also highlight that this relationship may depend on the types of fintech sectors and bank ownership. More specifically, the positive association between this cooperation and banks’ risk-adjusted returns only holds in the comparison sector of fintech, whereas there is a negative relationship between them in the payments and mobile wallets sector. Furthermore, state-owned commercial banks that engage in more bank–fintech cooperation tend to generate greater earnings. If we look at listed banks, the positive effect of bank–fintech partnerships on risk-adjusted returns still holds. A similar result was also found in the case of large banks.

Practical implications

Our empirical evidence provides motivations for incumbent banks to implement appropriate strategies toward diversity in bank–fintech partnerships when fintech firms have engaged in various financial segments.

Originality/value

This study adds more evidence to the existing literature on the relationship between bank–fintech cooperation and bank performance.

Keywords

Acknowledgements

This research is funded by the University of Economics and Law, Vietnam National University, Ho Chi Minh City, Vietnam.

Citation

Le, T., Ngo, T., Nguyen, D.T. and Do, T.T.M. (2024), "Fintech and banking: friends or foes? Evidence from bank–fintech cooperation", International Journal of Bank Marketing, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJBM-09-2023-0525

Publisher

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Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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