The dark side of FinTech in financial services: a qualitative enquiry into FinTech developers’ perspective

Abstract

Purpose FinTech offers numerous prospects for significant enhancements and fundamental changes in financial services. However, along with the myriad of benefits, it also has the potential to induce risks to individuals, organisations and society. This study focuses on understanding FinTech developers’ perspective of the dark side of FinTech.Design/methodology/approach This study conducted semi-structured interviews with 23 Nigerian FinTech developers using an exploratory, inductive methodology The data were transcribed and then thematically analysed using NVivo.Findings Three themes – customer vulnerability, technical inability and regulatory irresponsibility – arose from the thematic analysis. The poor existing technological infrastructure, data management challenges, limited access to data and smartphone adoption pose challenges to a speedy integration of FinTech in the country, making customers vulnerable. The lack of privacy control leads to ethical issues. The lack of skilled developers and the brain drain of good developers present additional obstacles to the development of FinTech in Nigeria.Research limitations/implications FinTech operation in a developing country differs from that in developed countries with better technological infrastructure and institutional acceptance. This study recognises that basic banking operations through FinTech are still not well adopted, necessitating the need to be more open-minded about the global practicalities of FinTech.Practical implications FinTech managers, banks and policymakers can ethically collect consumer data that can help influence customer credit decisions, product development and recommendations using the mobile app and transaction history. There should be strict penalties on FinTech for selling customers’ data, sending unsolicited messages or gaining unnecessary access to the customer’s contact list. FinTech can offer to educate consumers about their financial management skills.Originality/valueWhereas other studies have focused on the positive aspects of FinTech to understand client perceptions, this study offers new insights into the dark side of FinTech by analysing the viewpoints of FinTech developers. Furthermore, the study is based in Nigeria, an emerging economy adopting FinTech, adding a new dimension to the body of knowledge.

Redefining banks in the digital era: a typology of banks and their research, managerial and policy implications

“…Traditional banks, as well as app-only and challenger banks, incorporate these fintech solutions into their financial services provision. Fintech's impact extends across various sectors, including banks, insurance, retail and investment companies, all of which leverage these advancements to improve their offerings and cater to the evolving needs of their customers (Sampat et al. , 2023).…”

“…Traditional banks, as well as app-only and challenger banks, incorporate these fintech solutions into their financial services provision. Fintech's impact extends across various sectors, including banks, insurance, retail and investment companies, all of which leverage these advancements to improve their offerings and cater to the evolving needs of their customers (Sampat et al, 2023). With the remarkable momentum gained by fintech, spearheading a digital transformation in the financial sector, it comes as no surprise that scholars and practitioners often associate fintech with traditional banks.…”

Intensifying materialism through buy-now pay-later (BNPL): examining the dark sides

“…Consumer advocates, policymakers and regulators worldwide are worried about the rapid growth of BNPL (Asif et al. , 2023) and its potential to put consumers into a debt trap (Singh, 2022; Sampat et al. , 2023) by encouraging consumers to buy things they cannot afford, leading to a culture of materialism and consumerism (Lia and Natswa, 2021).…”

“…Consumer advocates, policymakers and regulators worldwide are worried about the rapid growth of BNPL (Asif et al, 2023) and its potential to put consumers into a debt trap (Singh, 2022;Sampat et al, 2023) by encouraging consumers to buy things they cannot afford, leading to a culture of materialism and consumerism (Lia and Natswa, 2021). Previous research suggests that irresponsible BNPL usage could harm consumers' financial and overall wellbeing (Schomburgk and Hoffmann, 2023;Lia and Natswa, 2021).…”

Guest editorial: The dark side of FinTech: unintended consequences and ethical consideration of FinTech adoption

“…In the second paper, the study conducted by Sampat et al (2024) centered on examining the negative aspects associated with the adoption of FinTech, specifically from the viewpoint of developers in the FinTech industry. This study utilized a qualitative method (e.g.…”