How Is FinTech Shaping Household Portfolio Behaviour?

This paper examines how FinTech adoption influences household portfolio allocation across major advanced economies. Using a flow‐of‐funds framework and the Almost Ideal Demand System (AIDS), we model household demand for currency, deposits, loans, debt securities, and equity in the United States, United Kingdom, Euro Area, Japan and Australia. We construct a composite FinTech index capturing household‐level digital financial participation and use it to test three hypotheses reflecting the payments, lending, and investment channels of FinTech. The results show clear cross‐country heterogeneity. FinTech increases the share of deposits in Australia and the Euro Area, raises household loan shares in the US, UK, and Japan, and in the US leads to a shift away from debt securities and toward equity. Overall, FinTech plays a measurable role in reshaping household balance sheets, with effects that vary across economies.