The effects of Financial Technology (Fintech) on the Financial Performance of Commercial banks in Zimbabwe

Author

Makanda, Tatenda

Title

The effects of Financial Technology (Fintech) on the Financial Performance of Commercial banks in Zimbabwe

Abstract

The study's goal was to determine how and to what extent the fintech sector affects the financial performance of Zimbabwe's banking sector. It also sought to review the growing body of theoretical and empirical research that has attempted to investigate the magnitude and effects of the fintech sector on the financial performance of Zimbabwean commercial banks. A causal research design was used in the study. The intended audience consisted of all eighteen licensed commercial banks in Zimbabwe. Secondary data sources were used to collect information on earnings before taxes, total assets, the number of registered mobile payment account users, the number of mobile payment transactions, and the transaction value. This was a longitudinal study, and the unit period of analysis was yearly. Data was collected for theighteen years from 2009 to 2021. The study applied correlation analysis and multiple linear regrsession equations, with the estimation technique being Ordinary Least Squares, to establish the association between the fintech sector and the financial performance of commercial banks.
When correlation analysis was conducted, the study established a significant positive association between all the predictor variables included in the study and the bank's return on assets with a significance value of 0.000. Before conducting the regression analysis, two variables were dropped because of the presence of multicollinearity. When correlation analysis was conducted, the study established a significant positive association between all the predictor variables included in the study and the bank's return on assets with a significance value of 0.000. When correlation analysis was performed, the study discovered a significant positive relationship with a significance value of 0.000 between all of the predictor variables included in the study and the banks' return on assets. As a result, all predictor variables were found to be significantly correlated. When correlation analysis was performed, the study discovered a significant positive relationship with a significance value of 0.000 between all of the predictor variables included in the study and the banks' return on assets. Thus, increased uptake of mobile payments leads to increased banks’ financial performance. It had a significance value of 0.000 which is greater than the critical value (α) of 0.05. It also had a T test value of 5.665 which lies out of range of the two tailed T test critical value of ±2.04523. The coefficient obtained implies that a unit increase in the number of registered mobile payment account users would lead to an increase in commercial bank performance by 1.206. The study concluded that that uptake of mobile payments and the banks’ financial performance have a significant positive relationship. Thus, increased uptake of mobile payments leads to increased banks financial performance. The study recommended that the regulator, the Reserve Bank of Zimbabwe, should recognize the role that fintech plays in the economy and try to incorporate it in the financial system and develop a regulatory framework for it. It also recommended that managers in the financial sector should use the study findings to establish a proper link between services offered by the fintech firms and bank specific factors to ensure that banks do not lose market share. Investors can also invest in banks stock as the financial performance will be on an upward trajectory influenced by the fintech sector.

Date

2022

Publisher

BUSE

Keywords

Performance

Financial Technology

Bank

Supervisor

Mr Njanike