The effect of banks' FinTech innovation on the risk-taking of the Iranian banking system

The global financial industry has been changing rapidly with the advancement of financial technology in the last few years. New emerging technologies such as internet finance, blockchain and mobile banking have revolutionized the financial industry. As a financial innovation, fintech has created profound changes in payment patterns and by relying on new transaction methods such as mobile payment, it has enabled traditional finance to overcome geographical and time limitations. The presence of fintech technology provides cheaper services with more choices for consumers to purchase financial services, which leads people's financial behavior towards digitalization. The emergence of financial technology has created new business models that challenge traditional risk-taking approaches. Based on this, it is necessary to gain insight into the impact of fintech innovation on the risk-taking of the banking system. Therefore, this article examines the impact of banking fintech innovation on their risk-taking using panel data in Iranian banks between 1386 and 1400. The experimental results show that the improvement of fintech innovation significantly reduces the risk-taking of banks. Banking fintech by using cryptographic technology for financial transactions, electronic equipment and financial software, they increase the security of transactions, increase the transparency of the banking system, reduce the possibility of human errors in the transfer process and financial transactions, and as a result, reduce banking risk.