Digitalization and Bank Profitability: The Role of Bank-Fintech Partnerships

This research is the first attempt to examine the joint effect of digitalization and bank–fintech partnerships on bank profitability in Vietnam between 2010 and 2019. This study also examines whether this impact may vary across different categories of bank ownership and size. The findings indicate a negative impact of digitalization on bank profitability. However, a U-shaped relationship between digitalization and bank profitability implies that the benefits of digitalization can be realized up to a certain threshold. Additionally, the positive joint effect of digitalization and bank–fintech partnerships on bank profitability suggests that bank–fintech partnerships may mitigate the negative impact of digitalization on bank profitability. Furthermore, larger, listed, and foreign-owned banks may benefit the most from pursuing both strategies.