Can FinTech Make the Financial System More Stable?

FinTech is fast becoming a key part of the financial system’s core infrastructure. Mobile banking, artificial intelligence, real-time payment rails, cloud computing, and blockchain now sit alongside the systems that banks, regulators, and households rely on every day.

Adoption alone, however, doesn’t produce stability. These innovations have also introduced new risks related to cybersecurity, regulatory oversight, market concentration, and systemic interconnectedness.

As FinTech becomes increasingly embedded in the financial ecosystem, the question is: does FinTech make the financial system more resilient, or does it create new vulnerabilities that traditional oversight struggles to detect?

Understanding this balance is critical because financial stability underpins sustainable economic growth, efficient capital allocation, and public confidence in financial institutions.

The evidence suggests that technologies which strengthen regulated institutions, improve risk visibility, and modernize essential banking infrastructure may deliver more durable value than platforms that mainly bypass traditional safeguards. For investors, this makes execution, governance, and institutional integration more important than exposure to “FinTech” as a broad category.

How FinTech Became a Core Pillar of Modern Finance

To move capital efficiently between savers and borrowers, enable people to transact with confidence, manage risk, support economic activity, and maintain monetary stability, we need a financial system.

Banks, a key part of this system, emerged centuries ago to make it all possible. They pool deposits, screen borrowers, and provide the payment infrastructure that commerce depends on. But over time, banks faced issues like financial crises and currency collapses, which led to deposit insurance and regulatory oversight.

Overall, banks, payment networks, capital markets, and regulatory institutions form the backbone of financial infrastructure, enabling individuals and businesses to access credit, make transactions, invest capital, and store wealth.

Initially, this financial system was primarily branch-focused and paper-based, and over time, technological advancement and globalization drove its digitization. But that wasn’t enough for consumers, who needed speed, accessibility, and convenience. Combined with the growing complexity of financial markets, these demands exposed the limits of traditional financial institutions and created opportunities for innovation.

The result was financial technology, or FinTech. The term dates back to the early 1990s, but it only gained widespread adoption over the past decade.

FinTech commonly refers to the application of technology to deliver financial products and services such as payments, lending, wealth management, insurance, and financial infrastructure. It became a mainstream force thanks to advances in technology that allowed new entrants to unbundle services that banks had delivered as a package and provide them more efficiently to consumers.

The internet boom gave financial technology explosive growth, leading it to span diverse sectors, including education, retail banking, investment management, and the cryptocurrency market. This highlights FinTech’s versatility and its profound impact on traditional financial systems and daily financial life.

Digital tools and platforms like mobile banking apps, peer-to-peer lending marketplaces, robo-advisors, and decentralized finance protocols deliver traditional financial functions through new channels, offering lower costs, greater efficiency, improved accessibility, better customer experiences, and expanded financial inclusion.

Access and efficiency have always been the core purpose of FinTech. The idea has been to reach people underserved by traditional banking systems while making it easier and cheaper to move and manage money.

Digital platforms have also increased access to financial products, particularly in emerging economies where traditional banking infrastructure is limited, resulting in greater financial inclusion and broader market participation.

Mobile money alone has expanded to well over half a billion accounts worldwide. According to industry estimates, the share of digitally active consumers using at least one FinTech service has grown from a small minority a decade ago to nearly universal in many leading markets today.

While real-time payments have reduced transaction friction, AI and data analytics are improving credit assessment and risk management.

With these benefits, the global FinTech industry has grown to be worth hundreds of billions of dollars and is projected to reach $1.76 trillion by 2034 as embedded finance, AI, and tokenized assets mature into standard infrastructure.

The proliferation of smartphones, digital wallets, instant payment systems, open banking initiatives, and cloud-based financial services has accelerated adoption dramatically worldwide, fundamentally reshaping financial ecosystems.

Increasingly, even traditional banks rely on technology to conduct their operations. As a result, core banking platforms, digital payment networks, lending markets, compliance functions, and customer interactions are now largely driven by technology.

This means FinTech isn’t just a disruptor challenging traditional institutions; rather, it is part of the core infrastructure of modern finance.

The growing integration of FinTech into financial architecture extends its influence beyond mere innovation and competition to the broader resilience of the financial system itself.

As FinTech tools move from optional add-ons to the very rails that banks, FinTech firms, and even government agencies now build on, any failure in these tools means all the institutions that depend on them cannot operate.

That is why adoption alone can’t substitute for stability. While technological innovation can improve efficiency and inclusion, it can also introduce new forms of systemic risk. A widely used tool that is unevenly regulated or concentrated in the hands of very few providers can transmit shocks as easily as it absorbs them.

Whether FinTech ultimately strengthens or weakens the system it now underpins therefore depends not on how many people or institutions have adopted it, but on governance, oversight, and market structure.

The key question is not whether FinTech is transforming finance, as it clearly is, but whether this transformation ultimately makes financial systems more stable or more vulnerable. This question forms the foundation of a recent study that provides a comprehensive assessment of the evolving relationship between FinTech and financial stability.

Does FinTech Strengthen Financial Stability?

The study titled Is Fintech a Catalyst to Financial Stability: A Scientific and Bibliometric Analysis¹ examined whether FinTech functions as a stabilizing force within financial systems or introduces vulnerabilities that could undermine systemic resilience.

“Global financial systems have changed, driven by the explosive growth of the financial technology industry (FinTech), thereby enhancing accessibility, inclusivity, and efficiency while adding regulatory complexity and systemic hazards,” so the “paper explores the role of fintech as a balance or a possible cause of systemic weakness in the backdrop of developments in decentralized finance, blockchain, and mobile banking.”

To answer the question that has academics, regulators, and industry participants divided, the authors take a two-pronged research approach.

As the study noted, the “contrasting effects” of FinTech create a need for an evidence-based and sensitive macroprudential approach to FinTech. So, instead of a single empirical test, the authors combined a targeted survey of 17 influential empirical studies with a bibliometric mapping of 148 research documents published between 2021 and 2025.

The research papers are drawn from the Web of Science Core Collection and processed using Biblioshiny and VOSviewer. The empirical part of the study makes clear why the debate has not been resolved: the variables, methods, and conclusions differ sharply depending on where and how the research is conducted.

For instance, studies of banks in emerging markets tend to focus on credit risk and non-performing loans, while studies of developed markets lean on insolvency measures like the Z-score. Studies of more digitized financial systems often use profitability metrics like return on equity (ROE) as a proxy for resilience.

Methodologically, the dominant approaches include panel regressions, system GMM estimators, and difference-in-differences designs, each chosen to fit the institutional context being studied. The result is that FinTech’s effect on stability is not fixed; rather, it is context-dependent.

This is the study’s central finding: the effect varies according to institutional quality, regulatory frameworks, market structure, and economic conditions, and also depends on the specific channel of FinTech being examined, whether mobile lending, crowdfunding, or decentralized finance.

The bibliometric part of the study provides a picture of how the research community itself has moved.

An analysis of publications between 2021 and 2025 highlights a rapid expansion in scholarly interest. The annual publication growth rate in this niche has been extraordinarily high at 88.5%, reflecting FinTech’s growing importance in academic, regulatory, and policy discussions.

A look into the co-citation and co-authorship networks, meanwhile, points to a geographic concentration of output. The analysis also points to a geographic concentration of research, with China emerging as a major source of scholarship and international collaboration alongside contributions from the United States, the United Kingdom, Australia, and several emerging economies.

China emerged “as a major center of international scholarship strengthened by significant contributions of emerging economies,” while significant contributions are also noted from the US, the UK, Australia, and several emerging economies, pointing to increasingly international and interdisciplinary research activity.

But as the scope of application grows, the research remains deficient, the study notes. The authors noted that this gap is particularly evident in countries like India, “where the huge intellectual output has not been enough to match the adoption of fintech services, such as UPI.”

Notably, output isn’t just geographically concentrated; the paper also points to a unified intellectual framework, describing it as “a multidisciplinary, fast-developing nexus which is facilitated by a more united body of scholars,” with themes tightly grouped around several main authors. To document the field’s intellectual evolution, the study uses keyword analysis, which shows a clear shift in themes.

Early research focused on COVID-19, volatility, and immediate systemic threats, reflecting a crisis-response stance. More recent work has focused on technology adoption, innovation, model-building, efficiency, digital finance, and policy integration, suggesting the field has matured from reactive risk assessment to forward-looking, data-driven analysis.

This thematic transition suggests that researchers increasingly view FinTech as a structural component of financial systems rather than just a revolutionary phenomenon. The paper reads:

“Keyword trends show that FinTech is becoming more widely acknowledged not just as a disruptive force but as a structural element of financial systems with significant potential to affect stability.” 

However, socioeconomic themes like financial inclusion, poverty, and gender have been found to be underexplored compared to risk, competition, and market efficiency themes.

According to the study, developed countries lead research on the G21 classification, which covers macroeconomic stability goals that account for social factors; themes like gender, credit, poverty, and entrepreneurship sit in less central clusters.

The geographic concentration and thematic imbalance, as the authors note, “indicate that, despite the fact that developed countries tend to focus more on socioeconomic factors, these are still underrepresented in mainstream discourse, risking a policy-research disconnect.”

The inadequate coverage of socioeconomic themes may also reflect the predominance of macro-financial and institution-oriented research. Another important insight concerns regulation and governance. The literature reviewed by the authors suggests that FinTech’s benefits are most sustainable when supported by adaptive regulatory frameworks. Tools like regulatory sandboxes, RegTech solutions, prudential supervision, and cyber-governance mechanisms are increasingly viewed as essential for balancing innovation with stability.

The study therefore argues that policymakers shouldn’t resist innovation, but they shouldn’t embrace it uncritically either. Instead, they should develop flexible frameworks that encourage technological progress while mitigating emerging risks.

The authors also flag a structural gap in their own research: academic output has not kept pace with the speed of real-world FinTech adoption, particularly in fast-moving markets, leaving policymakers with less rigorous evidence than the pace of change would ideally demand.

Taken together, the study’s central conclusion is one of conditional, not universal, stability. FinTech strengthens financial systems in some settings, especially where it expands access to credit, enhances operational efficiency, and market discipline is strong. But it destabilizes them in others and potentially generates new forms of systemic risk, particularly where transparency is weak, regulation lags innovation, interconnectedness is excessive, or adoption is unusually rapid and unregulated.

What it all means is that FinTech shouldn’t be evaluated as inherently beneficial or inherently harmful. Its influence on financial stability depends on how effectively technological innovation is integrated into existing financial systems, governed by regulatory institutions, and aligned with broader economic objectives.

Reality also shows that technological transformation creates both opportunities and risks, requiring careful management rather than simple acceptance or rejection.

As the study concluded, “there is an urgent need for evaluation methods that are both uniform and adaptable, capable of capturing diverse regional realities while aligning with global stability objectives.”

Fidelity National Information Services (NYSE: FIS)

In the world of FinTech, FIS stands out for providing core banking, payments, capital-markets, risk, compliance, and treasury technology to developers, businesses, and established financial institutions.

Unlike consumer-facing FinTech firms that focus mainly on payments, lending, or digital banking applications, FIS operates at the foundational layer of the financial ecosystem.

As the study noted, FinTech can enhance stability by improving efficiency, transparency, and financial infrastructure when implemented within proper governance frameworks, and FIS’s contribution here is marked by its technology’s ability to help modernize legacy systems, support digital transformation, improve data management, and aid institutions in managing complex regulatory requirements.

This positions FIS as an example of the institutional FinTech model highlighted by the study: technology integrated into regulated financial infrastructure rather than designed primarily to operate outside it.

On market performance, FIS is currently trading at $41.50, down 38% YTD. With a $21.23 billion market cap, FIS has a 52-week range of $37.42-$71.90. It has an EPS (TTM) of 6.50 and a P/E (TTM) of 6.33. FIS pays a dividend yield of 4.27%.

As for the company’s financials, it reported revenue of $3.4 billion for Q2 2026, up 29% from the prior-year period and 31% on an adjusted basis. Its GAAP net earnings were $231 million, or $0.45 per diluted share.

The company’s adjusted EBITDA surged 35% to $1.4 billion, while adjusted net earnings came in at $763 million. Adjusted EPS was $1.48 per diluted share, up 9%.

“Our first half reflects the strength of the business we have built, defined by durable recurring growth, expanding margins, and accelerating cash generation,” said CEO Stephanie Ferris. “Banks are investing decisively behind modernization and AI, and they are choosing FIS as their partner. With the FIS® Total Issuing™ Solutions acquisition ahead of plan, we are uniquely positioned to leverage our global scale and end-to-end solutions to serve financial institutions of all sizes.”

By segment, Banking Solutions revenue jumped 44% on both a GAAP and adjusted basis to $2.5 billion, while adjusted EBITDA increased 50% to $1.1 billion. This segment serves financial institutions with core processing and transaction processing software.

The Capital Markets segment, which serves global financial services clients and corporations with a range of lending, treasury, and risk management solutions, saw revenue increase 3.5% on a GAAP basis and 3.2% on an adjusted basis to $810 million. Adjusted EBITDA came in at $420 million, up 2.8%.

The Corporate and Other segment moved in the other direction, with revenue falling 26% to $84 million and an adjusted EBITDA loss of $147 million.

Given that the company runs many of its clients’ core systems, Ferris noted that they “sit on a rich set of data” and “as AI adoption grows, that data becomes a meaningful advantage and enables us to deliver smarter solutions, automate workflows, and improve outcomes for clients.”

During the earnings call, Ferris also shared that enterprise-wide sales growth increased double digits over the last 12 months. A key part of this growth is the Total Issuing business (TSYS), acquired for $13.5 billion.

The acquisition, which completed earlier this year, expanded FIS’s total addressable market by $28 billion.

“Through the acquisition of TSYS, we gained access to a large and rapidly growing global issuing TAM, a market we did not previously serve at scale, and we did it by acquiring the industry’s best, most scaled processor.”

– Ferris

FIS ended the second quarter with $493 million in net cash from operating activities and $525 million in free cash flow. It returned $270 million to shareholders during this period, including $42 million in share repurchases and $228 million in dividends.

For the full year, the company expects adjusted revenue growth of 29%-30% and 7%-8.5% growth in adjusted EPS, with free cash flow projected between $2.15 billion and $2.25 billion.

Conclusion

Over the past decade, FinTech experienced massive adoption. Starting as a technological innovation, it soon became a core part of the modern financial system by reducing costs, improving efficiency, and increasing speed for people and businesses worldwide.

But as the latest study shows, adoption and stability are not the same thing. While FinTech innovations promote operational effectiveness and financial inclusion, they also expose markets to volatility, regulatory gaps, and new sources of systemic risk.

For FinTech to contribute to a more stable financial system, it needs robust governance, adaptive regulation, and a focus on systemic resilience.

Click here for a list of top fintech stocks.

References

1. Rani, B. & Dochania, C. S. Is FinTech a catalyst to financial stability: A scientific and bibliometric analysis. Finance Research Open, 2(3), 100158 (2026). https://doi.org/10.1016/j.finr.2026.100158