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Bridging the Gap? Fintech and financial inclusion

Author

Listed:
  • Josep Gisbert

    (IE UNIVERSITY)

  • José E. Gutiérrez

    (Banco de España)

Abstract

The rise of FinTech lenders offers an opportunity to promote financial access but may disrupt banks’ banking efforts. This paper presents a banking model where an incumbent bank specializes in certain niche markets. When a FinTech lender enters, competition intensifies, reducing the bank’s gains from serving some of its niches. Although FinTech lending can help serve certain unattended niches, the bank may abandon others, creating an ambiguous impact on financial inclusion. Financial inclusion may even decline when the FinTech lender is less efficient at serving new niches and better able to compete with the bank for its customers.

Suggested Citation

  • Josep Gisbert & José E. Gutiérrez, 2024. "Bridging the Gap? Fintech and financial inclusion," Working Papers 2426, Banco de España.
    • Handle: RePEc:bde:wpaper:2426
    DOI: https://doi.org/10.53479/37433
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    File URL: https://www.bde.es/f/webbe/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/24/Files/dt2426e.pdf
    File Function: First version, August 2024
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    More about this item

    Keywords

    FinTech; financial inclusion; soft information; regulatory arbitrage; economic growth;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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