Fintech and Non-Performing Loans: Evidence from Oman’s Banking Sector

The emergence of financial technology (FinTech) has significantly transformed the financial sector, reshaping traditional banking operations and risk management practices. The objective of the study is to investigate the impact of Fintech adoption on the operational efficiency and non-performing loan (NPL) percentages of the Omani banking industry. Drawing on secondary data from annual reports from 2015 to 2024, the study aims to provide insights on the role of FinTech in enhancing credit risk management in the banking sector. The study’s regression results indicate a negative, but statistically insignificant, relationship between Fintech adoption and NPLs, with transactional income showing a weak effect on both gross and net NPLs. The model demonstrates strong explanatory power for gross NPLs (R² = 0.9766, p = 0.0023), while the net NPL model shows lower statistical significance (R² = 0.8217, p = 0.1152). These findings suggest that although FinTech contributes to operational efficiency and credit risk assessment, its direct impact on reducing NPLs remains limited in the Omani context. The research contributes to the literature on the fintech revolution in the banking sector by providing policymakers and other stakeholders with useful insights to strengthen operational performance and risk management frameworks in the Omani banking sector.

financial technology (FinTech), non-performing loan (NPL), Credit Risk Management, Banking Sector.

1. Abdullah, W., Rahmati, S., Mohammad, A., Al-Hajj, N., & Khalaf, B. A. (2024). Does Non-performing Loans Affect Bank Lending Behavior?. In The AI Revolution: Driving Business Innovation and Research: Volume 2 (pp. 919-933). Cham: Springer Nature Switzerland.‏ [Google Scholar] [Crossref]

2. Afroj, F., Dutta, C. B., & Farjana, F. (2024). Interrelationship between bank efficiency and non-performing loans: evidence from Bangladesh. Journal of Banking and Financial Technology, 8(1), 29-44. [Google Scholar] [Crossref]

3. Akerlof, G. A. (1970). A market for “lemons”: Quality uncertainty and the market mechanism. The Quarterly Journal of Economics, 84(3), 488–500. https://doi.org/10.2307/1879431 [Google Scholar] [Crossref]

4. Albi, R. U., Komalasari, A., & Syaipudin, U. (2025). The Influence of Earnings Quality, Banking Technology, Operational Efficiency, and Non-Performing Loans (NPL) on Firm Value. Jurnal Economic Resource, 8(1), 315-321.‏ [Google Scholar] [Crossref]

5. Allen, F. & Anthony M. Santomero. (1997). A theory of financial intermediation. Journal of Banking & Finance, 21(11–12), 1461–1485. https://doi.org/10.1016/S0378-4266(97)00032-0 [Google Scholar] [Crossref]

6. Ally, O. J., Kulindwa, Y. J., & Mataba, L. (2025). Financial technology and credit risk management: the case of non-performing loans in Tanzanian banks. Cogent Economics & Finance, 13(1), 2459188.‏ [Google Scholar] [Crossref]

7. Atisu, J. C., Mensah, N., Alipoe, S. A., & Rahman, S. A. (2024). The Effect Of Non-Performing Loans On The Financial Performance Of Commercial Banks In Ghana. IOSR Journal of Economics and Finance, 15(5), 42-48.‏ [Google Scholar] [Crossref]

8. Baharuddin, C., Liutfi, A., Ar, D. P., Rizal, M., & Sasmita, H. (2025). Non Performing Loan Resolution Strategies and Impact on Financial Performance. Golden Ratio of Mapping Idea and Literature Format, 5(2), 106-114.‏ [Google Scholar] [Crossref]

9. Bhattarai, Y. R. (2016). Effect of non-performing loan on the profitability of commercial banks in Nepal. Prestige International Journal of Management and Research, 10(2), 1-9.‏ [Google Scholar] [Crossref]

10. Beck, T. (2020). FinTech and financial inclusion: Opportunities and pitfalls. Asian Development Bank Institute Working Paper Series, 1165. https://doi.org/10.2139/ssrn.3383615 [Google Scholar] [Crossref]

11. Chai, Y., & Sun, S. (2024). Can the development of fintech mitigate non-performing loan risk? Finance Research Letters, 67(Part B), 105889. https://doi.org/10.1016/j.frl.2024.105889 [Google Scholar] [Crossref]

12. Chen, F. W., Feng, Y., & Wang, W. (2018). Impacts of financial inclusion on non-performing loans of commercial banks: Evidence from China. Sustainability, 10(9), 3084.‏ [Google Scholar] [Crossref]

13. Chukwu, G. N., Muritala, T. A., Akande, J. O., & Adekunle, A. O. (2024). Impact of Non-Performing loan on bank performance in Nigeria. Journal of Law and Sustainable Development, 12(6), e3796-e3796.‏ [Google Scholar] [Crossref]

14. Davis, F. D., & Venkatesh, V. (1996). A critical assessment of potential measurement biases in the technology acceptance model: Three experiments. International Journal of Human-Computer Studies, 45(1), 19–45. https://doi.org/10.1006/ijhc.1996.0040 [Google Scholar] [Crossref]

15. ISAKOV, O. (2024). Factors affecting non-performing loans: Empirical evidence from commercial banks in Uzbekistan. Journal of Economics and Financial Analysis, 8(2), 1-21.‏ [Google Scholar] [Crossref]

16. Li, X., Yang, J., & Zhang, X. (2025). Fintech and the NPL Provisioning Coverage Ratio: Facilitating or Inhibiting. Asia Pacific Economic and Management Review, 2(4).‏ [Google Scholar] [Crossref]

17. Mamatzakis, E., & Tsionas, M. (2018). Decomposing global bank productivity growth: the role of non-performing loans, equity and technology (No. 18-41).‏ [Google Scholar] [Crossref]

18. Ozili, P. K. (2022). Bank non-performing loans in the fintech era. International Journal of Financial Innovation in Banking, 3(2), 95-112.‏ [Google Scholar] [Crossref]

19. Qin, Z., & Jing, Z. (2025). Fintech adoption and credit risk mitigation: Evidence from Chinese commercial banks. Sustainability, 17(22), 10294. https://doi.org/10.3390/su172210294 [Google Scholar] [Crossref]

20. Sadok, H., & El Hadi El Maknouzi, M. (2025). Evaluation of the fintech era on the performance of Moroccan banks: analysis through non-performing loans. F1000Research, 13, 1365.‏ [Google Scholar] [Crossref]

21. Safitri, M., & Oktavia, V. (2022). The role of interest rates on the effect of non-performing loans and capital adequacy ratios on banking profitability (case study on conventional commercial banks listed on the Indonesia stock exchange 2016-2020). Jurnal Cakrawala Ilmiah, 1(7), 1785-1796.‏ [Google Scholar] [Crossref]

22. Serkbayeva, Z., Zhumabayeva, M., Kassenova, G., Karimbayeva, G., Faizulayev, A., & Kulumbetova, D. (2024). Examining the impact of fintech and other factors on banking practices: QISMUT+ 3 countries. Cogent Business & Management, 11(1), 2385069.‏ [Google Scholar] [Crossref]

23. Sewanyina, M., Nyambane, D., Manyange, M., & Ongesa, T. (2025). Managing non-performing loans in the banking sector: Determinants, impacts, and innovative solutions: A systematic literature review. F1000Research, 14, 486.‏ [Google Scholar] [Crossref]

24. Shrestha, P. M., & Khadka, K. K. (2024). Impact of non-performing loan on profitability of Nepalese commercial banks. Researcher CAB: A Journal for Research and Development, 3(1), 62-75.‏ [Google Scholar] [Crossref]

25. Vatansever, M., & Hepsen, A. (2015). Determining impacts on non-performing loan ratio in Turkey. Journal of Applied Finance and Banking, 5(1), 1.‏ [Google Scholar] [Crossref]

26. Vives, X. (2019). Digital disruption in banking. Annual Review of Financial Economics, 11, 243–272. https://doi.org/10.1146/annurev-financial-100719-120854 [Google Scholar] [Crossref]

27. Wang, H., Mao, K., Wu, W., & Luo, H. (2023). Fintech inputs, non-performing loans risk reduction and bank performance improvement. International Review of Financial Analysis, 90, 102849 [Google Scholar] [Crossref]

28. Yang, C. C. (2017). Reduction of non-performing loans in the banking industry: an application of data envelopment analysis. Journal of Business Economics and Management, 18(5), 833-851.‏ [Google Scholar] [Crossref]

29. Zeb, A., Ashraf, A., Israr, S., & Meghwar, D. R. (2024). Financial Technology's Impact On The Non-Performing Loans Held by Commercial Banks In Pakistan. Kashf Journal of Multidisciplinary Research, 1(12), 1-10.‏ [Google Scholar] [Crossref]

• The Correlation of Marketing Strategies and Financial Performance of Motor Parts Businesses in the City of Mati
• The Role of Blockchain-Based Smart Contracts in Enhancing Financial Transparency and Efficiency in the Emerging Market
• Exploring Intention among Universiti Teknologi Mara Terengganu Community to Donate into Education Waqf Fund
• Utilizing AHP Method to Rank Preference of Waqf Fund Usage for UiTM Terengganu, Malaysia
• The Influence of Portfolio Diversification on Financial Performance: Evidence from Listed Banks on the Ghana Stock Exchange