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The influence of Fintech innovations on bank competition and performance in South Africa

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  • Njabulo Mhlongo

  • Damien Kunjal

  • Paul-Francois Muzindutsi

Abstract

In recent years, the South African banking sector has undergone rapid transformations due to innovations in financial technology (Fintech). Regulated by the South African Reserve Bank (SARB), banks are essential for economic growth through capital provision, risk management, and transaction facilitation. Recent Fintech advancements offer more efficient, personalised, and cost-effective solutions, challenging traditional banking models. Against this background, the current study explores the impact of Fintech innovations on banking sector competition and performance, focusing on banks listed on the Johannesburg Stock Exchange (JSE) from 2000 to 2023. Using a panel regression approach, the findings reveal that Fintech enhances competition, particularly through mobile transactions. However, Fintech does not significantly improve bank performance indicators, suggesting traditional structures remain at play. These findings have significant implications for stakeholders in the South African banking sector.

Suggested Citation

  • Njabulo Mhlongo & Damien Kunjal & Paul-Francois Muzindutsi, 2025. "The influence of Fintech innovations on bank competition and performance in South Africa," Modern Finance, Modern Finance Institute, vol. 3(2), pages 1-12.
    • Handle: RePEc:bdy:modfin:v:3:y:2025:i:2:p:1-12:id:252
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    References listed on IDEAS

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    1. Pradeep Dwivedi & Jawaher Ibrahim Alabdooli & Rajeev Dwivedi, 2021. "Role of FinTech Adoption for Competitiveness and Performance of the Bank: A Study of Banking Industry in UAE," International Journal of Global Business and Competitiveness, Springer, vol. 16(2), pages 130-138, December.
    2. Kupukile Mlambo & Mthuli Ncube, 2011. "Competition and Efficiency in the Banking Sector in South Africa," African Development Review, African Development Bank, vol. 23(1), pages 4-15.
    3. Adey Tarawneh & Aisyah Abdul-Rahman & Syajarul Imna Mohd Amin & Mohd Fahmi Ghazali, 2024. "A Systematic Review of Fintech and Banking Profitability," IJFS, MDPI, vol. 12(1), pages 1-21, January.
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