Fintech and the fringe economy: Investigating variations by zip code poverty and racial composition

Access to financial products and services in the United States has long been unequal, and the unprecedented rapid adoption of fintech in the banking sector has brought new opportunities and challenges for financial access. Existing fintech research has mostly focused on mortgage lending; no study has investigated how fintech adoption relates to alternative financial services, a growing fringe economy that is commonly found in poor, minority-majority neighborhoods. With a uniquely merged dataset, this study investigates how zip-code-level fintech rates relate to the spatial locations of urban alternative financial service storefronts. Findings show that urban zip codes with higher potential fintech rates were less likely to have fringe economy presence, while racial and ethnic characteristics of a zip code remain important predictors of AFS provider, and economic stress may facilitate fringe economy penetration in the rapidly evolving financial service market.