Impact of Fintech Investment towards Banks’ Performance in Malaysia, Indonesia and Thailand

The rapid development of technology during the Fourth Industrial Revolution has spurred the growth of financial techonology, bringing along an opportunity for innovation in the financial sector. Investment towards that sector draws the attention of banks worldwide under the promise of increased efficiency and therefore higher performance for their banks. The aim of this study is to examine the impact of financial technology investment on bank performance in Malaysia, Indonesia and Thailand. This study was conducted by analysing the data of 6 banks from these countries for a period of 10 years using multiple linear regression. Financial technology investment is measured using technology spending ratios as well as the intensity of research and development (R&D) of banks. Meanwhile, bank performance is measured by the profit margins of these banks. Analysis of the pooled sample found that financial technology investment significantly affects bank performance. The relationship between bank performance and R&D intensity for the pooled sample is significantly negative. However, the finding varies for each sample data according to each country. Therefore, banks looking to invest in financial technology should frame their investment plan by researching the opportunities and risks to their respective banks. They should also take into account the level of development of financial technology in the country and their long-term goals in investing in FinTech.