How does fintech affect bank efficiency in Taiwan?

by Chang-Sheng Liao

This study investigates the impact of financial technology (fintech) on bank efficiency in Taiwan from 2007 to 2020, using parametric and non-parametric analyses. In the future, fintech is expected to play an important role in bank sustainability operations. The findings show that fintech-related initiatives affect bank efficiency. These results illustrate how fintech can help banks directly or indirectly improve their efficiency, leading to higher profits or lower costs. For instance, mobile payment systems, a fintech-related initiative, improve bank efficiency. However, this degree of improvement is not substantial. In general, the findings imply that fintech-related initiatives do not significantly improve bank efficiency, implying an IT “productivity paradox.”