Do words create reality? The development of fintech-banking as seen in financial reports

In this work, we propose a way to examine the development of fintech banking in the previous decade (2010–2020) through a new index that measures innovation tendency. The index is based on textual analysis of financial statement relying on a sample of 127 banks from 18 countries for the years 2012–2019. The results were compared to the expected trends in the market as may be predicted by the "disruptive innovation" model, given that "fintech" represents the phenomenon known as technologically innovative disorder. The comparison indicates that the proposed index can explain the variance between banks and countries in terms of the development of innovation in banks. The index was found to be significant positively correlated with the granting of a regulatory license to a digital bank without branches. Thus a digital bank may have the effect of innovative disruption to traditional banking in the country in which it was established. While the index reflects a past situation, it shows that banks that have identified the introduction of the innovative disruption have preceded others by using "innovative" terms in their financial statements, so tracking the development of financial statements is of material forecasting value. Based on the literature on the subject, it can be said that if banks’ propensity for innovation increases as fintech becomes more established in the country, an innovation - supporting banking regulation is an important factor in maintaining the competition in banking services a head of the entry of the large technology companies, since the tendency of a regulated market is to wait for the regulator's instructions.