Harnessing FinTech for Financial Inclusion: Analysis of the influence of system scalability, online authentication, and products substitutability

Abstract

This study looks at the evolution of FinTech from a disruptive force to a
complementary element within the financial landscape. Drawing on disruptive
innovation theory and financial intermediation theory, this study takes a holistic
approach to uncover the mechanisms driving this change. Data was collected
using a structured questionnaire distributed to 162 IT employees of financial
institutions in Tanzania. The data was analyzed using structural equation
modeling with Smart PLS. The results show the positive influence of the
scalability of FinTech systems and online authentication on financial inclusion
and emphasize their central role in expanding access to financial services. The
effectiveness of online authentication in promoting financial inclusion is
particularly noteworthy. However, the results show that product substitutability
has a negligible influence on financial inclusion, pointing to the need for a
strategic reorientation of resource allocation. These findings provide industry
practitioners with valuable strategies to navigate the complex intersection of
FinTech and traditional banking. This study contributes to the theoretical
discourse by presenting a unique model that integrates disruptive innovation
theory and financial intermediation theory. It argues for concerted efforts to use
FinTech as a catalyst for promoting financial inclusion and draws attention to
its potential as a powerful enabler for inclusive financial systems.

Keywords: Financial inclusion; financial technology; FinTech; Disruptive Innovation;
Financial Intermediation.