Abstract

The financial services sector is experiencing a significant shift propelled by financial technology (FinTech). Blockchain-based payment systems and AI-driven credit evaluation tools are transforming banking operations, client engagement, and resource management. Although FinTech adoption offers clear advantages in efficiency, outreach, and decision-making, it also concurrently alters the risk landscape for banking institutions. The chapter examines the dual aspects of FinTech adoption in banks—its capacity to improve operational performance while concurrently affecting banks' risk-taking behaviours. The chapter presents a balanced, evidence-based discussion on how banks should effectively adopt digital innovation, rather than portraying technology as either a catalyst for growth or a potential threat. This chapter explains how innovation and prudence coexist in banking and provides a framework for assessing FinTech uptake and risk-taking.