Impact of Fintech Solutions on Transforming Microfinance Banking Services During COVID-19

Shahzaib Abdul Rasheed; Israr Ahmed; Hyder Ali

doi:10.52633/0rzjvv19

Authors

Shahzaib Abdul Rasheed Independent Research Scholar Author
Israr Ahmed Ilma University, Karachi, Pakistan Author
Hyder Ali Bahria University, Karachi, Pakistan Author

DOI:

https://doi.org/10.52633/0rzjvv19

Keywords:

Covid-19, Fintech, Microfinance banks, Digital banks, Financial innovation, Digital banking, Digital transformation

Abstract

The current study explores the role of fintech in the operations of microfinance banks (MBs) in Pakistan's microfinance sector. In recent times, the importance of these institutions has gained momentum, especially in supporting underprivileged populations during the COVID-19 pandemic, when economic activities worldwide were halted. The study uses 400 employees’ valid responses from five microfinance banks in Pakistan. The data collection was done using a five-point Likert scale questionnaire. Fintech was the independent variable, microfinance bank services was the dependent variable, and COVID-19 was the moderating variable. PLS-SEM was applied to perform the analysis of the study. The results revealed that the moderator variable (COVID-19) enhanced the association between fintech and MBs, with fintech demonstrating a favorable and significant impact on Microfinance bank services (MBs). Based on the findings, microfinance institutions can include fintech solutions to enhance their service delivery in the sector, responding to external challenges and building on their own. This can lead to strengthening the role played by the sector in achieving its objectives of financial inclusion, especially during times of economic hardship, such as that brought about by the COVID-19 pandemic. The study also highlights the Pakistani microfinance sector, providing insight into how the adoption of fintech can enhance financial services in emerging markets. Technological innovation has been underlined as having played an important role in reinforcing the resilience and growth of the financial sector.

Author Biographies

Israr Ahmed, Ilma University, Karachi, Pakistan

Associate Professor, Ilma University, Karachi, Pakistan.
Hyder Ali, Bahria University, Karachi, Pakistan

Senior Lecturer, Bahria University, Karachi, Pakistan.

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