Fintech adoption, Bank performance, Covid-19 and government ownership: An empirical study of Vietnamese Banks

Abstract

Recently, the rapid advancement of Financial Technology (FinTech) has revolutionized the banking sector worldwide, creating new opportunities to improve bank performance. In Vietnam context, the adoption of FinTech has accelerated considerably, particularly following the COVID-19 pandemic, with notable expansions in digital banking services and collaborations between banks and FinTech companies. This empirical research analyzes the impact of FinTech adoption on the performance of 29 Vietnamese banks over the period 2012-2023. If offers an in-depth evaluation of FinTech adoption metrics and their influence on main performance indicators: ROA, ROE, and NIM. Besides, employing a mixed-method approach that integrates document analysis and quantitative techniques, the research explores the effects of bank-specific variables (including size, shareholder equity, NII, NPLs, loans, deposits, liquidity and government ownership), and macroeconomic factors (including GDP, inflation, governance, RIR, and COVID-19). The findings confirm a positive correlation between FinTech adoption and bank performance, in which the acceleration of FinTech adoption among Vietnamese banks owing to the COVID-19 pandemic, has led to a positive impact on their performance, while no considerable evidence was found to suggest that government-owned banks (over 50%) are more impacted by FinTech adoption compared to other banks. This research offers meaningful insights for policymakers and industry stakeholders, enriching the theoretical and practical knowledge of FinTech’s role in improving financial performance and operational effectiveness of banks.