Financial Technology: evidence in the European Banking System

The focal point of this paper lies in whether Financial Technology (FinTech) will change the financial system in a manner that will behoove the banking system, in terms of stability and profitability. With this rationale, we attempt to comprehend FinTech drivers and its potential effects focusing on the European banking system. We test our hypotheses employing a panel GLS analysis of both quantitative and qualitative data, spanning the period 2015-2018 and pertaining to a sample of 1,250 banks located within the European Union (EU), examining a total of 5,000 useful observations. The results of our study highlight financial innovation's impact on leverage, bank organization and earning margins. We provide a series of practical recommendations for regulators and European commercial banks with the aim to strengthen their position in financial innovation and monitor the associated risks. This study aims to bridge a gap in existing literature regarding the multiple facets of impact that technological innovations generate on the banking sector, with specific reference to the European banking system