The impact of financial technology on the profitability of the banking sector in Iran

Articles in Press

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fum

10.30471/iee.2025.10682.2479

Abstract

The emergence of financial technology has significantly impacted the banking sector, creating both opportunities and challenges. This research examines the impact of fintech on the profitability of Iranian banks during the period from 2007 to 2021. For data analysis, a panel data model with a random effects approach has been used. The results indicate that fintech has a positive and significant impact on the profitability of banks. The application of financial technologies leads to the improvement of banking processes, reduction of risk, increased transparency and efficiency, and optimization of services. Additionally, the coefficients related to bank size and income diversification are positive and significant, indicating the role of these factors in reducing risk and increasing profitability. On the other hand, the relationship between risk-taking behavior and bank profitability has been assessed as negative and significant. This research emphasizes the importance of integrating new technologies into the banking system and suggests that banks should increase their productivity and profitability by developing comprehensive strategies, strengthening regulatory frameworks, and utilizing advanced technologies.

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Journal of Economic Essays: an Islamic Approach

Articles in Press, Accepted Manuscript
Available Online from 19 August 2025

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