Fintech and Non-Performing Loans: Evidence from Oman’s Banking Sector

Abstract

The emergence of financial technology (FinTech) has significantly transformed the financial sector, reshaping traditional banking operations and risk management practices. The objective of the study is to investigate the impact of Fintech adoption on the operational efficiency and non-performing loan (NPL) percentages of the Omani banking industry. Drawing on secondary data from annual reports from 2015 to 2024, the study aims to provide insights on the role of FinTech in enhancing credit risk management in the banking sector. The study’s regression results indicate a negative, but statistically insignificant, relationship between Fintech adoption and NPLs, with transactional income showing a weak effect on both gross and net NPLs. The model demonstrates strong explanatory power for gross NPLs (R² = 0.9766, p = 0.0023), while the net NPL model shows lower statistical significance (R² = 0.8217, p = 0.1152). These findings suggest that although FinTech contributes to operational efficiency and credit risk assessment, its direct impact on reducing NPLs remains limited in the Omani context. The research contributes to the literature on the fintech revolution in the banking sector by providing policymakers and other stakeholders with useful insights to strengthen operational performance and risk management frameworks in the Omani banking sector.