FinTech Development Is Also an Institutional Story

For much of the past decade, discussions about the development of FinTech have focused on factors like internet connectivity, mobile penetration, and digital infrastructure.

This makes sense as they are supported by numbers. With over 6 billion people now using the internet and four out of five people over the age of ten owning a mobile phone, these factors provided the platform for offering digital financial services.

As a result, the global FinTech market has grown to $395 billion in 2025 and is expected to surpass $1.7 trillion by 2034.

But while essential, these drivers do not tell the whole story. Reducing the rise of FinTech to just bandwidth and smartphones risks missing the deeper narrative. Emerging evidence suggests the growth of FinTech isn’t entirely a technology story but also an institutional and societal one.

What this means is that the success of digital financial ecosystems isn’t only dependent on the availability of technology but also a myriad of other factors such as regulatory effectiveness, social inclusion, and the broader environment in which innovation occurs, much like how platforms that have truly transformed access to credit, payments, and savings have almost always done so.

But before understanding this broader story, let’s get a clear understanding of what FinTech actually is.

FinTech, or financial technology, encompasses software, mobile applications, and other technologies that enable users and enterprises to access and manage their finances digitally. It has revolutionized how financial services are delivered and consumed.

Initially used by banks to describe technology that helped them track and manage their clients’ accounts, it is now used to do much more.

Today, it involves technologies, services, and companies in the financial sector that focus on retail banking, investment management, financial education, and crypto, with startups receiving billions in venture funding. Traditional finance (TradFi) giants are also busy acquiring new ventures or building their own FinTech offerings.

As a result, FinTech has become an integral part of our daily lives, with more than 50% of Americans using mobile payment apps like Venmo, PayPal, or Cash App. Meanwhile, mobile banking users in the US are projected to reach 80 million by 2028.

This growth is driven by the ability of FinTech products and services to offer seamless, round-the-clock access to financial services, expanded access to credit, enhanced security, and streamlined business processes.

These benefits make FinTech attractive, but the outcomes of these powerful tools depend on governance, institutional quality, and design choices; in the absence of these, the technology tends to stall.

So, as digital finance becomes increasingly integrated into economic activity, the question we must ask is: what kind of society makes FinTech thrive?

A cross-country study offers a remarkable answer to that question: women’s political empowerment. Using per capita FinTech credit as their primary measure of FinTech development, the researchers find a strong positive relationship between the extent of women’s participation in political and civic life and the depth of FinTech activity in a given country.

According to the study, women’s political empowerment is positively associated with FinTech development, not only because of representation itself but also because politically inclusive societies tend to build stronger institutions and greater capacity for innovation.

The Missing Link Between Financial Inclusion and FinTech Growth

Traditional financial services have existed for a few centuries. Despite that, they have been expensive, inefficient, and inaccessible for a large portion of the population, especially in developing countries.

Financial inclusion is important for countries and has been a central policy objective for many because it reduces poverty and promotes economic development.

Despite governments’ progress in expanding access to formal financial services, millions of individuals remain excluded from traditional banking systems today. This is where digital financial platforms emerge as a solution and a key driver of financial sector transformation.

The use of technology to deliver financial services holds great potential to enhance financial inclusion, reduce income inequality, and foster economic growth.

As a result, FinTech has experienced explosive growth, yet a significant gender gap persists: women are less likely to use these products and services.

This can be seen in the usage of digital payments, which jumped to 59% in 2021 from 39% in 2014. But female respondents consistently showed 7% lower adoption rates across all survey years. Data also show that FinTech adoption by men has been, on average, 6.3% higher, a gap that varies considerably across countries.

For instance, per the 2021 Global Findex survey¹, 94% of women in the US use mobile financial services compared to 89% of men, but in Turkey, only 46% of women adopt FinTech services compared to 77% of men.

While previous research points to the role of IT infrastructure and more developed markets for this variation, the latest study proposes gender dynamics as a crucial factor in understanding these cross-country disparities.

One important dimension of gender dynamics is women’s political empowerment (WPE).

Over the years, research on the subject has found that economic development, financial market development, and technological progress play key roles in FinTech growth. Regulatory quality has been found to be equally important to the success and stability of FinTech ecosystems.

But the gender dimension and the ways in which social and political inclusion can shape financial innovation and digital adoption have largely been neglected.

So, authors Sami Al Kharusi and Bedri Kamil Tas from the College of Economics and Political Science, Sultan Qaboos University, and Hamdi Bennasr of the College of Business and Economics, Qatar University, examined whether women’s political empowerment (WPE) influences FinTech development.

Their analysis reveals a “strong and statistically significant positive relationship” between the two.

The results remain robust across a wide range of model specifications and a comprehensive set of sensitivity tests. They also remain strong after controlling for structural, macroeconomic, and institutional factors like financial development, banking depth, internet penetration, and governance quality.

The finding even survives instrumental variable approaches designed to address the possibility that causality runs in reverse, that FinTech-advanced countries simply happen to be more progressive on gender. It further holds across income groups, alternative FinTech measures, and the exclusion of the pandemic year, making it difficult to dismiss as a statistical artifact.

Among the various dimensions of greater empowerment examined by the authors, they found women’s involvement in civil society to have the strongest influence.

This means that societies where women participate more fully in political and civil life tend to have more accountable, more stable, and better-regulated governance institutions, which in turn create the conditions for FinTech to take root.

The authors’ analysis also identifies institutional quality and innovation capacity, which are strengthened and enhanced by WPE, respectively, as two main channels through which this effect operates. They account for a substantial 73% of the total WPE effect.

Furthermore, the study reports that WPE significantly improves financial literacy, with important policy implications. It says:

“Although financial literacy does not independently predict FinTech credit volumes in our aggregate setting, the positive effect of WPE on financial literacy suggests that empowering women in politics may enhance digital financial inclusion through improved financial skills in the population.” 

By identifying gender empowerment as a supporting system for FinTech development, the study emphasizes the importance of inclusive political systems in fostering innovation by strengthening governance institutions and expanding broader capacity for innovation.

Thus, “governments and international organizations should view women’s empowerment not merely as a social goal but also as an economic and technological catalyst,” says the study.

How Women’s Political Empowerment Builds Stronger FinTech Ecosystems 

Previous research highlights the positive influence of women’s political empowerment (WPE) on technological change and the adoption of new technologies, including green finance, increased access to electricity, and economic growth.

To examine the impact of WPE on FinTech development, the authors of the latest study drew on data from 191 countries over the period 2011 to 2020.

Using per capita FinTech credit, the study measures the level of FinTech development by capturing financial activity that employs digital channels outside of the TradFi system.

They found that WPE is a fundamental aspect of FinTech development. Their findings also show that gender in politics plays a crucial role in shaping the rate of this development.

As for the primary channels through which this empowerment occurs, institutional quality and innovation capacity are the dominant mechanisms.

Technology innovation, according to the study, is the central mechanism, achieved by facilitating the implementation of new ideas that increase financial inclusion and strengthen FinTech ecosystems.

This is accomplished through creativity and policy experimentation, driven by the expansion of the talent pool in politics and increased diversity in decision-making. Not only do empowered female politicians direct resources toward projects that reduce financial vulnerability, but they also promote female labor force participation and stimulate entrepreneurship, which, in turn, lead to new ideas. Furthermore, high levels of WPE are associated with stronger institutions and civil liberties, which foster technological adoption and political stability.

Another way WPE does this is by reducing financial vulnerability, lowering entry barriers, and strengthening property-right protections, as female political leaders usually prioritize social welfare. The study notes:

“The transformational leadership style of female leaders results in greater innovation by promoting a culture of intellectual stimulation, offering incentives for innovation, encouraging collaboration and teamwork, and driving an intrinsically motivated outcome-orientation.” 

They are also less prone to corruption, more intrinsically motivated, more likely to contribute to improved economic performance in their jurisdictions, and more likely to complete infrastructure projects.

As research has shown, nations with greater representation of women in politics tend to be more inclusive and have adaptive regulatory environments, and by recognizing FinTech’s contribution to innovation and growth, they may support policies like simplified licensing procedures, lower taxation, and clearer frameworks to safeguard customers, as well as help FinTech firms mitigate credit risk through stronger property rights and legal enforcement, thus encouraging FinTech expansion.

The study points out that female political participation reduces external conflicts, political risks, and ethnic tensions.

WPE is further associated with higher trust and ethical governance, which can increase public confidence in FinTech products. Empowered women also tend to promote education and financial literacy, thereby improving citizens’ capacity to adopt and use digital financial tools.

As the study notes, politically empowered women place greater emphasis on education policy and direct public spending toward schooling and public goods that broaden access to education, thereby raising the share of the financially literate adult population. A well-established determinant of digital financial inclusion and FinTech adoption, financial literacy means individuals can better evaluate the risks and benefits of digital financial services and recognize the cost savings offered by FinTech platforms.

Overall, the “paper provides new empirical evidence that women’s political empowerment (WPE) is a key driver of FinTech development across countries.”

The implications of the study go beyond gender equality, though. The findings suggest that FinTech development is shaped by a broader ecosystem in which inclusive political institutions, effective governance, innovation capacity, and social participation reinforce one another.

So, countries that strengthen these foundations may be better positioned to attract investment, support entrepreneurial activity, and expand access to digital financial services.

For investors, the findings point to a broader lesson: the most attractive FinTech markets may not simply be those with fast internet, a young population, and advanced technology adoption, but those where digital infrastructure, institutional quality, financial inclusion, innovation capacity, and social participation operate as the main pillars of long-term growth.

Thus, assessing institutional resilience alongside technological readiness may provide investors with a more comprehensive framework for evaluating future FinTech opportunities.

Investing in FinTech

In the world of FinTech, global payments technology company Visa Inc (V ) stands out for its vast network and strong exposure to financial inclusion trends.

With a market cap of $610 billion, Visa is currently trading at $323.6, up 4.42% in the past three months but down 7.67% YTD and 8.91% in the past year. It has an EPS (TTM) of 11.48 and a P/E (TTM) of 28.21.

It facilitates global commerce and cross-border money movement among consumers, merchants, financial institutions, and government entities in more than 200 countries. More importantly, Visa continues to sharpen its edge in the digital payments space through growing FinTech partnerships, acquisitions, and platform building.

As financial inclusion expands and digital payments become more deeply embedded in economic activity, payment networks like Visa stand to gain from rising transaction volumes regardless of which consumer-facing platforms ultimately dominate the market.

This has helped Visa achieve high-quality earnings and a stronger moat than most FinTech firms.

For the most recent quarter, Q2 2026, the company reported revenue growth of 17%, the highest since 2022, to $11.2 billion. Excluding post-pandemic recovery and the Visa Europe acquisition, this was the strongest growth since 2013, driving its GAAP EPS up 36% and non-GAAP EPS up 20%. Its GAAP net income was $6 billion, or $3.14 per share, and non-GAAP net income was $6.3 billion, or $3.31 per share.

These strong numbers came on the back of “resilient” customer spending, with key business drivers including total cross-border volume, which increased 12% YoY, and payments volume and processed transactions, both of which increased 9% YoY.

The company is making great progress in consumer and commercial payments and money movement, with CEO Ryan McInerney stating during the earnings call, “We’re winning with fintechs, wallets and apps. They are building on our stack and tapping into our innovation and our vast acceptance footprint to help hyperscale their growth, and ours, capturing both carded and non-carded payments.”

He also believes AI and agentic commerce will expand their addressable market, further accelerating Visa’s long-term growth.

This, he explained, will happen in a few important ways: accelerating the digitization of B2B payments and commerce worldwide, creating significantly more transactions, and increasing overall economic growth.

Visa is well-positioned to win due to its network, security, and trust. “We see no other payment method on Earth that delivers all of these features. Buyers know this, sellers know this, and soon, so will agents. We expect more transactions, more value-added services, and therefore, more revenue in the years ahead from agentic,” said McInerney.

Visa is also involved in the blockchain and stablecoin space, which it sees as “significant opportunities,” and that’s why it has established itself as a key interoperability layer between infrastructure and real-world solutions for users.

But an even bigger opportunity lies in value-added services, which now represent 30% of Visa’s net revenue and are growing at 25% or more in constant dollars. The vast majority of these services are linked to transactions, cards, and accounts and are only strengthened with AI, “reinforcing their importance as a growth lever for years to come.”

As for Visa’s financial firepower, the company reported $14.2 billion in cash, cash equivalents, and investment securities at the end of March 2026.

Meanwhile, its operating expenses declined 4% during this period to $4 billion, as its litigation provision decreased 67% to $329 million.

At the end of the quarter, Visa had 1.92 billion Class A common shares outstanding. In Q2, it also issued $3 billion in fixed-rate senior notes, with maturities ranging from 3 to 10 years and interest rates from 3.8% to 4.7%.

During the three months ended March 31, 2026, Visa repurchased $7.9 billion worth of its shares. This left $13.2 billion in approved funds for repurchasing, and in April, the board of directors authorized a new $20 billion multi-year Class A common stock repurchase program. A cash dividend of $0.670 per share was announced for the quarter.

Click here for a list of top financial sector stocks.

Conclusion

FinTech growth has long been thought of as just a technology story, but it is also an institutional one, with the latest study providing the first systematic empirical evidence of financial innovation being linked to the political empowerment of women. This highlights the importance of inclusive institutions as a structural foundation for digital financial ecosystems. And as nations seek to expand financial inclusion and foster innovation-led growth, the study suggests that strengthening women’s civil liberties, expanding their participation in civil society, and supporting their presence in political institutions can help build more resilient FinTech sectors.

References

1. Al Kharusi, S., Bennasr, H. & Tas, B.K. Female political empowerment and FinTech development. International Review of Economics & Finance, 105476 (2026). https://doi.org/10.1016/j.iref.2026.105476