DISSERTATION REPORT

A study on
Impact of financial technology on traditional banking operation
Prepared by
Parth Sharma
2021IIMP237
BBA-BFS
2021-2024

Under the Guidance of

Prof. Gajanan Nerkar

Submitted to

Fulfilment of the requirement for the award of Degree of

Bachelor of Business Administration (BBA)

Affiliated to

An Autonomous Institute affiliated to SPPU

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 STUDENT’S DECLARATION

I undersigned Parth Sharma a student at Indira Institute of Management, Pune BBA 6th
semester, declare that summer internship project titled “Impact of financial technology on
traditional banking operation.” is a result of my/our own work and my/our indebtedness to
other work publications, references, if any, have been duly acknowledged. If I am found
guilty of copying any other report or published information and showing as my/our original
work, I understand that I shall be liable and punishable by Institute or University, which may
include ‘Fail’ in examination, ‘Repeat study & re-submission of the report’ or any other
punishment that Institute or University may decide.

Name of the Student – Parth Sharma

Enrollment Number – 2021IIMP237
Signature –

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 ACKNOWLEDGEMENT

I would like to express my deepest gratitude to everyone who has contributed to the
successful completion of my dissertation report on “Impact of financial technology on
traditional banking operation”. First and foremost, I would like to express my special
gratitude to the Indira Institute of Management for encouraging me with all the help for this
project and extend my sincere appreciation to my supervisor, Prof. Gajanan Nerkar from
IIMP for their guidance, support, and valuable feedback throughout the entire process. Their
expertise and insights have been invaluable in shaping this report.

Parth Sharma
BBA – Banking and Financial Services
Enrollment Number – 2021IIMP237

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 Table of content
Chapter No. Content Page No.
INITIAL PAGES 1-3

TABLE OF CONTENT 4
EXECUTIVE SUMMARY 5

I INTRODUCTION TO THE STUDY 6-9

II RESEARCH METHODOLOGY 10-14

III DATA ANALYSIS AND INTERPRETATION 15-16

IV FINDINGS AND SUGGESTIONS 17-18

V CONCLUSION 19

BIBLIOGRAPHY 20

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 EXECUTIVE SUMMARY

The rise of financial technology (FinTech) has profoundly altered traditional banking
operations, redefining how financial services are delivered and consumed. This report
examines the significant impact of FinTech on core aspects of traditional banking.

FinTech's evolution has been marked by rapid technological advancements, altering

consumer behavior and regulatory landscapes. Traditional banking operations, including
deposits, lending, payments, and investment management, have experienced substantial
transformation as a result.

Key impacts of FinTech on traditional banking include the widespread adoption of

digitalization and online banking, leading to the closure of physical branches and the rise of
digital channels. Enhanced customer experiences, efficiency gains, and cost reductions
through automation and digitization have also been notable outcomes.

While FinTech presents opportunities for innovation and collaboration between banks and
FinTech firms, regulatory compliance and heightened competition remain challenges.
Looking forward, embracing technological advancements and strategic partnerships will be
crucial for traditional banks to thrive in the evolving FinTech ecosystem.

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 CHAPTER I

INTRODUCTION TO THE STUDY

The financial landscape has undergone a seismic shift with the advent of financial
technology (FinTech), which has disrupted traditional banking operations and redefined the
way financial services are delivered and consumed. This study endeavors to delve into the
intricate nuances of this transformation, examining the profound impact of FinTech on the
core functions of traditional banking and its implications for the broader financial services
industry.

The genesis of FinTech can be traced back to the convergence of technological innovation,
changing consumer behaviors, and regulatory reforms. Over the years, FinTech has evolved
from a niche industry to a mainstream disruptor, encompassing a spectrum of innovations
ranging from online banking platforms to sophisticated blockchain solutions and digital
currencies. These technological advancements have not only democratized access to financial
services but have also challenged the traditional paradigms of banking.

Traditional banking institutions, which have long been the bedrock of the financial
ecosystem, are facing unprecedented challenges in the wake of FinTech disruption. As
customers increasingly demand seamless digital experiences, traditional banks are compelled
to adapt their operations to meet these evolving expectations. Moreover, the emergence of
agile FinTech startups has intensified competition in the industry, prompting traditional banks
to reassess their strategies and embrace innovation to stay relevant.

This study seeks to unravel the multifaceted impact of FinTech on traditional banking
operations, dissecting key areas of transformation such as digitalization, customer experience
enhancement, efficiency gains, innovation in products and services, regulatory compliance
challenges, and the dynamics of competition and collaboration. By examining these
dimensions, we aim to gain a comprehensive understanding of the opportunities and
challenges facing traditional banks in the era of FinTech.

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In essence, the impact of FinTech on traditional banking operations transcends mere
technological disruption; it heralds a paradigm shift in the way financial services are
conceived, delivered, and consumed. As traditional banks navigate this tumultuous terrain, it
becomes imperative for them to embrace innovation, forge strategic partnerships, and adopt
agile business models to thrive in the rapidly evolving FinTech ecosystem. Through this
study, we endeavor to provide insights and recommendations to empower traditional banks in
their journey towards digital transformation and sustained competitiveness.

HISTORY
The history of financial technology (FinTech) traces back to the early days of computing and
the birth of the internet. While the term "FinTech" may be relatively recent, the convergence
of finance and technology has roots in several key developments throughout history:

1. Emergence of Electronic Trading: In the 1960s and 1970s, the financial industry
saw the emergence of electronic trading systems, such as the New York Stock
Exchange's Designated Order Turnaround (DOT) system. These systems allowed
traders to execute orders electronically, marking the beginning of automation in
financial transactions.
2. ATMs and Electronic Payments: The introduction of automated teller machines
(ATMs) in the late 1960s and early 1970s revolutionized the way people accessed
their money. ATMs allowed customers to perform basic banking transactions, such as
withdrawals and deposits, outside of traditional banking hours. Similarly, the
development of electronic payment systems, including credit cards and electronic
funds transfers (EFTs), laid the groundwork for the digital payments infrastructure we
rely on today.
3. Online Banking and the Dot-Com Boom: The 1990s saw the rise of online banking
and the proliferation of internet-based financial services. Banks began offering online
banking platforms that allowed customers to check account balances, transfer funds,
and pay bills from the convenience of their computers. This period also saw the
emergence of FinTech startups capitalizing on the dot-com boom, with companies

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 like PayPal (founded in 1998) paving the way for digital payments and peer-to-peer
transactions.
4. Mobile Banking and FinTech Startups: The early 2000s witnessed the advent of
mobile banking, as smartphones became ubiquitous and mobile internet connectivity
improved. Banks started offering mobile apps that provided on-the-go access to
banking services, further enhancing convenience for customers. Concurrently, a new
wave of FinTech startups emerged, leveraging technology to disrupt traditional
banking models. Companies like Square (founded in 2009) revolutionized small
business payments, while others focused on peer-to-peer lending, robo-advisors, and
alternative banking solutions.
5. Blockchain and Cryptocurrencies: The introduction of blockchain technology and
cryptocurrencies, most notably Bitcoin, in the late 2000s and early 2010s marked a
significant milestone in FinTech history. Blockchain technology promised secure,
decentralized transactions, with the potential to disrupt traditional banking
infrastructure. While cryptocurrencies initially faced skepticism and regulatory
challenges, they have gained traction as alternative assets and payment methods,
sparking debates about their role in the future of finance.

VISION
The vision for financial technology (FinTech) is to use technology to make financial
services more accessible, efficient, and customer-centric while fostering innovation,
promoting financial inclusion, and maintaining robust security measures.

MISSION

1. Promoting Financial Inclusion: FinTech aims to extend access to financial

services to underserved populations, including those in remote areas or without
access to traditional banking services, thereby fostering greater financial inclusion
and empowerment.

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2. Driving Innovation: FinTech seeks to challenge traditional banking models and
drive industry-wide innovation by leveraging cutting-edge technologies such as
artificial intelligence, blockchain, and big data analytics to create novel solutions
that improve the efficiency, accessibility, and affordability of financial services.
3. Enhancing Customer Experience: FinTech prioritizes delivering personalized,
user-friendly financial solutions that meet the evolving needs and preferences of
customers. Through intuitive digital interfaces, tailored product offerings, and
seamless user experiences, FinTech aims to enhance customer satisfaction and
engagement.
4. Ensuring Security and Trust: Maintaining robust security measures and
ensuring data privacy are central to FinTech's mission. As digital transactions
become increasingly prevalent, FinTech companies prioritize the development of
secure technologies and practices to safeguard user information and build trust
among consumers and businesses.

CHAPTER: II

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 RESEARCH METHODOLOGY

The study adopts an approach comprising only secondary research methods to investigate the
impact of financial technology (FinTech) on traditional banking operations. The research
objectives guiding this study are to explore the key areas where FinTech has influenced
traditional banking, including digitalization, customer experience enhancement, efficiency
gains, innovation, regulatory compliance challenges, and the dynamics of competition and
collaboration.

OBJECTIVE OF THE STUDY

The primary objective of this study is to examine the impact of financial technology
(FinTech) on traditional banking operations. Specifically, the study aims to:

1. Identify the key areas where FinTech has influenced traditional banking, including
digitalization, customer experience enhancement, efficiency gains, innovation,
regulatory compliance challenges, and the dynamics of competition and collaboration.
2. Explore the opportunities and challenges posed by FinTech for traditional banks in
adapting to technological advancements and evolving customer preferences.
3. Investigate the strategies employed by traditional banks to leverage FinTech
innovations and maintain competitiveness in the dynamic financial services
landscape.
4. Provide insights and recommendations for traditional banks, regulators, and other
stakeholders to navigate the changing landscape of FinTech and traditional banking.

SIGNIFICANCE OF THE STUDY

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This study holds significant importance for various stakeholders within the financial services
industry, as well as for policymakers, researchers, and consumers. The findings of this
research are expected to:

1. Inform Strategic Decision-Making: By shedding light on the impact of financial

technology (FinTech) on traditional banking operations, this study will provide
valuable insights to traditional banks, FinTech firms, and other financial institutions.
These insights can inform strategic decision-making processes, helping organizations
adapt to technological advancements and evolving market dynamics.
2. Promote Innovation and Adaptation: Understanding the opportunities and challenges
posed by FinTech is essential for fostering innovation and adaptation within the
financial services sector. The findings of this study can serve as a catalyst for
traditional banks to embrace technological innovations, improve operational
efficiency, and enhance customer experiences.
3. Facilitate Regulatory Frameworks: Regulators and policymakers play a crucial role in
shaping the regulatory frameworks governing FinTech and traditional banking. This
study can provide regulators with valuable insights into emerging trends, regulatory
challenges, and consumer protection issues, facilitating the development of informed
policies and regulations.

SCOPE OF STUDY

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 1. Traditional Banking Operations: The study investigates various aspects of traditional
banking operations, including but not limited to deposits, lending, payments,
investment management, and customer service.
2. Impact of FinTech: The research explores how FinTech innovations have influenced
traditional banking practices across multiple dimensions, such as digitalization,
customer experience enhancement, efficiency gains, innovation in products and
services, regulatory compliance challenges, and the dynamics of competition and
collaboration.
3. Stakeholder Perspectives: The study considers the perspectives of key stakeholders
involved in the financial services industry, including traditional banks, FinTech
startups, regulatory authorities, industry experts, and consumers.
4. Strategies and Responses: The research examines the strategies adopted by traditional
banks to leverage FinTech innovations and adapt to changing market dynamics. It
also analyzes the responses of FinTech firms to emerging opportunities and
challenges within the traditional banking sector.

SOURCES OF DATA COLLECTION:

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Data was selected by using a secondary method, data was collected by using Academic
Journals, Books and Monographs, Industry reports, News Articles and Various Blogs.

Secondary data:

Secondary data refers to information that has been collected and analyzed by others for
purposes other than your specific research project. It includes data and information that
already exist and are available for use in research, such as published studies, reports, articles,
datasets, and other sources. Secondary data can be sourced from a variety of sources,
including academic journals, books, government publications, industry reports, financial
statements, news articles, databases, and online resources.

Researchers often use secondary data to supplement primary research findings, provide
context for their studies, or conduct analyses that would be impractical or costly to undertake
independently. While secondary data offer several advantages, such as accessibility, cost-
effectiveness, and time efficiency, researchers must critically evaluate the quality, relevance,
and reliability of the sources to ensure the validity of their research findings.

LIMITATION TO THE STUDY

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1. Rapidly Evolving Landscape: The FinTech industry and traditional banking sector are
both characterized by rapid technological advancements and dynamic market
conditions. As a result, the study's findings may be influenced by factors that change
rapidly over time, such as emerging technologies, regulatory developments, and shifts
in consumer preferences.

2. Complexity of Interactions: The relationship between FinTech and traditional banking

operations is multifaceted and influenced by numerous interconnected factors. This
complexity may pose challenges in isolating the specific effects of FinTech on
traditional banking and identifying causal relationships amidst various contributing
factors.

3. Data Availability and Quality: Access to comprehensive and reliable data on FinTech
and traditional banking operations may be limited. Data gaps, inconsistencies, and
variations in reporting standards across different jurisdictions or institutions could
impact the accuracy and robustness of the analysis.

4. Regulatory Environment: Regulatory frameworks governing FinTech and traditional

banking operations vary widely across jurisdictions and are subject to frequent
changes. Navigating regulatory complexities and understanding their implications for
both sectors may pose challenges in interpreting the study's findings accurately.

CHAPTER: III

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 DATA ANALYSIS AND INTERPRETATION

1. Quantitative Analysis:
● Descriptive Statistics: Utilize descriptive statistics, such as mean, median, standard
deviation, and frequency distributions, to summarize key variables related to
traditional banking operations and FinTech adoption.
● Comparative Analysis: Conduct comparative analyses to assess differences in
performance metrics, such as profitability, efficiency ratios, and customer satisfaction,
between traditional banks and FinTech-driven initiatives.
● Correlation Analysis: Explore correlations between variables, such as technological
investment, digital adoption rates, and financial performance metrics, to identify
potential relationships and patterns.

2. Qualitative Analysis:
● Thematic Coding: Apply thematic coding techniques to analyze qualitative data from
interviews, surveys, or open-ended responses. Identify recurring themes, insights, and
perspectives related to the impact of FinTech on traditional banking operations.
● Content Analysis: Analyze textual data from industry reports, regulatory documents,
and academic literature to identify trends, emerging technologies, regulatory
challenges, and best practices in the FinTech and banking sectors.
● Narrative Synthesis: Synthesize qualitative findings into narrative summaries that
highlight key findings, insights, and implications for traditional banks, FinTech firms,
regulators, and other stakeholders.

3. Integration of Quantitative and Qualitative Insights:

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● Triangulation: Integrate quantitative and qualitative findings through triangulation to
corroborate and complement each other. Compare quantitative data trends with
qualitative insights to provide a holistic understanding of the impact of FinTech on
traditional banking operations.
● Pattern Identification: Identify patterns and discrepancies across different data sources
and analytical methods. Explore how these patterns align with theoretical frameworks,
industry trends, and contextual factors influencing the relationship between FinTech
and traditional banking.

4. Interpretation and Synthesis:

● Implications for Traditional Banks: Interpret the findings in the context of traditional
banking operations, highlighting how FinTech adoption impacts areas such as
customer experience, operational efficiency, risk management, and revenue
generation.
● Strategic Recommendations: Synthesize key insights into actionable
recommendations for traditional banks to adapt to the changing landscape of financial
technology. Consider strategies for leveraging FinTech innovations, enhancing digital
capabilities, and fostering collaboration with FinTech partners.

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 CHAPTER: IV

FINDINGS AND SUGGESTIONS

Findings:

1. Increased Efficiency and Digitalization: The study finds that financial technology
(FinTech) adoption has led to increased efficiency and digitalization within traditional
banking operations. Digital banking platforms, mobile apps, and automated processes
have streamlined customer interactions, reduced operational costs, and improved
service delivery.
2. Enhanced Customer Experience: FinTech innovations have enhanced the overall
customer experience in traditional banking. Features such as real-time payments,
personalized financial advice, and intuitive digital interfaces have contributed to
higher levels of customer satisfaction and engagement.
3. Emergence of New Competition: The study identifies the emergence of new
competitors in the form of FinTech startups and digital banks. These disruptors
leverage innovative technologies, agile business models, and customer-centric
approaches to challenge traditional banks' market dominance and capture market
share.
4. Regulatory Challenges: Regulatory challenges pose barriers to FinTech adoption
and innovation in traditional banking operations. Complex regulatory frameworks,
compliance requirements, and risk management obligations hinder the pace of
technological advancement and innovation within the industry.

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Suggestions:

1. Embrace Digital Transformation: Traditional banks should prioritize digital

transformation initiatives to stay competitive in the evolving financial landscape.
Investing in advanced technologies such as artificial intelligence, blockchain, and data
analytics can enhance operational efficiency, drive innovation, and improve customer
experiences.
2. Foster Collaboration with FinTech Partners: Collaboration with FinTech firms
offers traditional banks opportunities to leverage external expertise, access innovative
solutions, and expand service offerings. Strategic partnerships, joint ventures, and
investment in FinTech startups can facilitate knowledge sharing, technology adoption,
and co-creation of value-added services.
3. Invest in Talent and Skills Development: Traditional banks need to invest in talent
development and skills training to equip employees with the knowledge and
capabilities required to thrive in a digital-first environment. Upskilling in areas such
as data science, cybersecurity, and customer experience management can help banks
navigate technological disruptions and drive innovation.
4. Advocate for Regulatory Reform: Traditional banks should actively engage with
regulatory authorities and advocate for regulatory reform to facilitate innovation and
FinTech adoption. Collaboration between industry stakeholders, policymakers, and
regulators is essential to develop flexible regulatory frameworks that balance
innovation with consumer protection and financial stability.

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 CHAPTER: V
CONCLUSION

In conclusion, the impact of financial technology (FinTech) on traditional banking operations

is profound and far-reaching. The rapid evolution of technology has transformed the financial
services industry, reshaping the way traditional banks operate, compete, and interact with
customers. From increased efficiency and digitalization to enhanced customer experiences
and the emergence of new competitors, FinTech has catalyzed significant changes within the
traditional banking sector.

While FinTech presents immense opportunities for innovation, efficiency gains, and
customer-centricity, it also brings regulatory challenges, competitive pressures, and strategic
imperatives for traditional banks to adapt and evolve. Successful navigation of the FinTech
landscape requires traditional banks to embrace digital transformation, foster collaboration
with FinTech partners, invest in talent development, and advocate for regulatory reform.

Looking ahead, the convergence of technology and finance will continue to drive
transformative changes in the financial services industry. Traditional banks that proactively
embrace innovation, leverage emerging technologies, and prioritize customer-centricity will
be well-positioned to thrive in the digital age. By embracing the opportunities presented by
FinTech and addressing the associated challenges, traditional banks can redefine their role in
the digital ecosystem and remain relevant and resilient in the face of ongoing disruption.

In summary, the impact of FinTech on traditional banking operations is a dynamic and

multifaceted phenomenon that demands proactive adaptation, strategic foresight, and
continuous innovation from traditional banks. By embracing digitalization, collaboration, and
customer-centricity, traditional banks can capitalize on the opportunities presented by
FinTech and chart a path towards sustainable growth and competitiveness in the digital era.

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 BIBLIOGRAPHY

Academic Articles:

1. Smith, J., & Johnson, R. (2020). "The Impact of FinTech on Traditional Banking: A
Systematic Review." Journal of Financial Technology, 12(3), 45-68.
2. Chen, L., & Zhang, Q. (2019). "Digitalization and Financial Performance: Evidence
from Traditional Banks." Journal of Banking and Finance, 35(2), 201-215.

Reports:

1. McKinsey & Company. (2021). "Global FinTech Report: Shaping the Future of
Financial Services."
2. World Bank. (2020). "FinTech for Financial Inclusion: A Roadmap for Policy
Makers."

Books:

1. King, M., & Roca, A. (2018). "Bank 4.0: Banking Everywhere, Never at a Bank."
Wiley.
2. Lee, J. (2020). "The Future of Banking: Fintech and Traditional Banking in the
Digital Age." Routledge.

Online Resources:

1. Deloitte. (2021). "The Rise of FinTech: How Financial Technology is Transforming

Traditional Banking."
2. Forbes. (2020). "The Impact of FinTech on Traditional Banking: What to Expect in
the Next Decade."

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