Vol. 4, Issue 1, Part A (2022)

This paper explores the transformative impacts of FinTech innovations on the structure of the banking sector at the level of business model configurations, operational process reengineering, and the dynamics of competition within the financial industry. Building on previous work, this paper examines how new players in the financial industry, along with digital platforms and data services, challenge banks’ positions in intermediation, customer relationship management, and value appropriation (Vives, 2019; Gomber et al., 2018) ^{[12, 13]}. This work uses a qualitative methodology, based on a systematic review of the academic and peer-reviewed literature, complemented with cases from emerging and developed markets. Further, using the work of Arnaut and Bećirović 2023) ^[3] and Awodu 2023 ^[15], the paper presents a comparative study of the traditional banking models and the banking model enabled by FinTech to outline the differences in structure and strategy.
According to the studies, innovations under FinTech have a double-edged impact on the banking sector. On the one hand, FinTech companies can enhance their services, becoming significantly more customer-oriented. On the other hand, less expensive services. This forces banks to improve their operational processes, increase the level of digitalization, and change approaches to regulatory compliance and risk management (Anand and Mantrala 2019; Omarova 2020) ^{[1, 14]}. According to the research, if traditional banks apply a hybrid approach, they have the best chances to hold their market position. This is the approach of combining in-house digital innovations with FinTech partnerships and collaborations. On the contrary, banks that refuse to change their technology and structure will have even faster intermediation and decreasing market position (Komandla and Perumalla 2017; Wewege et al. 2020) ^{[5, 24]}.