The Impact of FinTech adoption and green banking practices on bank sustainability performance: green financing as a mediator

Abstract

This study explores the influence of FinTech adoption and green banking practices on the sustainability performance of banks in Sri Lanka, with a particular focus on the mediating role of green financing. It seeks to address the research gap related to the interaction between digital transformation and sustainability in the Sri Lankan banking industry. This study uses a positive research approach and a survey-based methodology to gather data from 250 managerial-level staff members of Sri Lanka's systemically important institutions. Partial least squares structural equation modeling (PLS-SEM) is used to examine the gathered data in order to evaluate the connections among green banking practices, FinTech uptake, and sustainability performance. The findings reveal that both green banking practices and FinTech adoption significantly positively influence bank sustainability performance. Moreover, green financing serves as a mediator in these relationships, amplifying the effects of green banking and FinTech adoption on sustainability outcomes. The study offers valuable insights for Sri Lankan banks, urging them to integrate FinTech and green banking practices into their operations to improve sustainability. The findings suggest that green financing is crucial for supporting sustainable projects for attracting socially responsible investors and enhancing bank performance in line with sustainability goals. This study is among the first to examine the combined effects of green banking, green financing, and FinTech adoption in Sri Lanka. By extending the Resource-Based View (RBV) theory and offering strategic advice for financial institutions operating in emerging economies, it adds to the body of knowledge in academia.