FINTECH and the business model of traditional banks: Development of a theoretical conceptual model

Abstract

In an ever-changing world, the rise of FINTECH has radically transformed the global banking landscape. Innovative players (start-ups, bigtechs and telecoms operators), often perceived as disruptors, are exploiting new technologies to offer faster, more accessible and personalised financial services. The rise of FINTECH is challenging the business model of traditional banks, which has traditionally been based on heavy infrastructures and institutional customer relationships.

The aim of this article is to understand how the adoption of FINTECH by traditional banks is affecting their business model and, consequently, their profitability. The study is based on an in-depth analysis of the mediating mechanisms, including the value proposition, value configuration and value capture, while exploring contingency factors such as bank size, regulatory modes and culture.

This article attempts to answer the following question: ‘By improving the components of traditional banks’ business model, FINTECH has an impact on banks' overall performance. However, the extent of this impact depends on several contingency factors’.

To address this issue, this article is based on a conceptual review combining a critical analysis of existing work and an integrative approach, in order to identify the complex interactions between these variables.

The results show that the adoption of FINTECH improves the components of the banks' business model, while emphasising that the extent of these effects depends strongly on organisational and institutional contingencies, leading to a theoretical conceptual model.

Finally, this study suggests avenues of reflection for researchers and professionals in the banking sector, while acknowledging as its main limitation the lack of empirical data to validate the hypotheses put forward.

Keywords: Fintech, Business model, Disruptive innovation, Value chain , Revenue model

JEL Classification : G21

Paper type: Theoretical Research