Fintech Adoption, Financial Inclusion, and Bank Performance: Evidence from the Asian Banking Industry

Financial technology (fintech) provides access to financial services without relying on physical branch infrastructure, thereby overcoming geographical barriers and reducing transaction costs for users, including those previously excluded. Evidence from global financial databases suggests that fintech has played a significant role in bringing unbanked adults into the formal financial system, although its impact on bank-level financial inclusion and performance remains empirically contested, particularly across economies at different stages of development. This study advances understanding of the impact of fintech adoption on financial inclusion and bank performance across 14 Asian countries, divided into four subgroups. Using bank-level panel data from Bloomberg for 173 banks over the period 2016–2024 and employing Driscoll–Kraay fixed-effects estimation, the study finds that, regardless of a nation’s level of development, fintech adoption significantly and generally consistently advances financial inclusion across Asian banking systems. They also show that the impacts of fintech on profitability are not ubiquitous nor instantaneous, and that in more technologically sophisticated economies, these effects may initially be detrimental before any longer-term performance advantages are materialize.