Impact Analysis of Fintech on Banking Industry

Disruptive innovation related modern information systems has recently altered the ways the companies do their businesses and it has positive impacts to those that are willing to adapt to it. The fast development of fintech startups on creating payment gateway and peer-to-peer (P2P) lending applications is one of examples for the modern disruptive innovations affecting to traditional financial business. The problem arises when the digital disruption affects the bank’s business models due to change in customer trends with additional impacts to conventional companies. This paper presents the quantitative approaches like statistical hypothesis testing and analysis of regression using convenient random sampling for better analyzing the impacts of fintech on conventional banking industry in Indonesia. A number of important and realistic variables, such as customer satisfaction, net promotion score, promotion, ease of use, etc., were considered in this research in order to find a variety of the value propositions that dominantly influence to the adoption of fintech or banking products. The results show that the banks have been disrupted by the payment fintech since the emergence of fintech companies in around 2015, mainly due to superior value propositions, like promotion with standardized beta value of 0.349 and wide range of merchants with 0.153, respectively. In addition, the fintech startups have digital strategies on adopting a customer-centric mindset and developing a product that gives their customer a high customer satisfaction. However, in the current time, P2P fintechs do not have that significant disruption to the banks, mainly due to the fact that the customers consider more on safety reasons.