Digital Transformation in Banking: The Interplay of FinTech, Risk Management, and Consumer Behavior

Abstract

This paper focuses on digital transformation in the banking sector, exploring its connections with financial technology (FinTech), risk management, regulatory dynamics, consumer behavior, and emerging technologies.Through a literature review and empirical analysis of 150 major banks across 30 countries from 2022 to 2024, it identifies key drivers and challenges of this transformation. Disruptive FinTech models (e.g., peer-to-peer lending, robo-advisory) have reshaped traditional banking operations, with 78% of surveyed banks reporting improved operational efficiency. However, new risks like cyber threats and data privacy concerns have emerged, demanding enhanced risk management and adaptive regulatory frameworks. Consumer behavior analysis shows 65% use mobile banking at least once a week, yet trust issues hinder full adoption. The paper also examines its policy and economic implications, noting its role in boosting financial inclusion in emerging economies while cautioning against potential financial instability risks. Its findings offer insights for bank managers, policymakers, and researchers.

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