Governing FinTech for performance: the monitoring role of female independent directors

Purpose The use of digital technologies in the financial service industry has brought new complexities to the corporate governance in banks. Relying on the agency perspective of the shareholder, debtholder, and societal governance in banks, this research examines the impact of financial technology innovation (FinTech) on banks’ performance by enlightening the monitoring role of female independent directors. Design/methodology/approach Relying on a sample of Italian banks observed during the period 2016-2020, we hand-collected data on the use of FinTech by considering (i) the in-house provisions of FinTech solutions, (ii) the collaboration with external FinTech firms, and (iii) a combination of both measures. We run a panel data regression analysis with fixed effects, measuring bank performance through bank competitiveness and bank riskiness. Findings We find that FinTech increases bank competitiveness in gathering money from depositors and that independent women on board mitigate the negative relationship between FinTech and the riskiness of banks’ assets, ameliorating the conflicting interests among shareholders, debtholder, and societal governance. Originality/value This study emphasizes the complexities of bank governance when dealing with FinTech in the wider perspective of equity governance, debt governance, and the societal governance spotlighting the importance of appointing female directors in independent positions to enhance the bright sides of financial innovation. We enrich the literature on FinTech with a finer understanding of the drivers and implications of in-house provisions of FinTech solutions versus the collaboration with external FinTech firms.