FinTech and the COVID-19 pandemic: Evidence from electronic payment systems

This paper investigates the effects of the coronavirus disease 2019 (COVID-19) pandemic on financial institutions and on consumers' adoption of Financial Technology (FinTech) for payments. This paper documents the following findings in Kenya. (1) The COVID-19 pandemic accelerated the adoption and increased the payment concentration of FinTech. We document an approximately 54% increase in mobile banking transactions, a 19.56% increase in mobile banking agents, and a 14.56% increase in the number of mobile banking accounts. (2) The use of all types of electronic payment cards declined significantly during the pandemic. (3) The pandemic magnified interbank contagion and liquidity risks and reduced both domestic and international electronic fund transfers via both the Real-Gross Settlement System and the Automated Clearing House. Overall, our results indicate that FinTech not only partially alleviated the negative impact of the COVID-19 pandemic during Q1 of 2021 but also accelerated consumers' adoption of FinTech and digital onboarding, especially in Q3 and Q4 of 2022.