ASSESSING THE IMPACT OF BANKING FINTECH INNOVATION ON BANK SELECTION BEHAVIOUR: EVIDENCE FROM DUAL BANKING MARKETS IN INDONESIA

Abstract

This study examines the effects of Banking Fintech and Financial Literacy on Banking Consumer Behaviour, with Perceived Bank Risk as an intervening variable within Indonesia’s dual banking system. A quantitative cross-sectional survey was conducted involving 500 banking customers, including conventional and Islamic bank users. Data were collected using a structured five-point Likert-scale questionnaire and analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM) with SmartPLS 4. The analysis included measurement model assessment, structural model evaluation, direct effects, and mediation analysis using 5,000 bootstrap samples. The results show that Banking Fintech significantly affects Perceived Bank Risk (β = 0.178; p = 0.021) and Banking Consumer Behaviour (β = 0.349; p < 0.001). Financial Literacy significantly affects Perceived Bank Risk (β = 0.302; p < 0.001) and has the strongest direct effect on Banking Consumer Behaviour (β = 0.505; p < 0.001). Perceived Bank Risk also significantly affects Banking Consumer Behaviour (β = 0.107; p < 0.001). Furthermore, Perceived Bank Risk significantly mediates the effects of Banking Fintech (β = 0.019; p = 0.048) and Financial Literacy (β = 0.032; p = 0.003) on Banking Consumer Behaviour. The findings highlight the importance of financial capability and digital banking innovation in shaping banking consumer behaviour.