Fintech and adoption in modern banking

Abstract

ABSTRACT                  

Finance Technology (fintech) is changing banking, with the UK emerging as a global leader, but is not widely adopted among consumers or institutions. The aim of this dissertation is to assess the drivers, barriers and strategies informing the use of fintech in UK banking and to do this from the perspective of three main themes: consumer trust; capacity of institutions; and regulatory restrictions and implications.

Using an interpretivist philosophy, an original qualitative study is conducted through the lens of secondary research and qualitative data, and three UK fintech thematic sources (academic; industry; and regulatory) were synthesised through thematic analysis. The main findings demonstrate that consumers aged 18-34 adopted fintech primarily for the convenience and transparency, while older consumer groups were more cautious given concerns for fraud and lack of digital literacy concerning fintech applications. Institutions' adoption of fintech applications is problematic given the protracted costs of maintaining legacy systems, and identifying opportunities for innovation, however, also constrained to regulatory compliance. Regulation facilitates innovation, through open banking and the FCA sandbox, but also constrains smaller institutions through compliance obligations.

The value of this study is it extends existing theories on adoption to include institutional and regulatory factors and provides practical recommendations for the future of fintech development, that meets consumer needs, that is inclusive and is sustainable in a regulatory environment in the UK.