Fintechs and Institutions: Evidence from an Emerging Economy

Abstract

Institutions play a vital role in restricting or encouraging the performance of any economic agent. In this context, fintechs represent a vector of exponential change in the global financial system and its institutions. However, despite the existing relationship between fintechs and institutions, there is a need for more studies exploring the connections between them. Beginning with a framework that integrates aspects of the relation between fintechs and institutions in the financial system, the objective of this article is to empirically demonstrate the interaction between fintechs and financial system institutions in an emerging country. To do so, the chosen research method was an embedded case study, which involved documental analysis and semi-structured interviews conducted with different agents in the Brazilian financial system, belonging to the following categories: technology providers, fintechs, regulatory institutions, financial institutions, and consumers. The findings validate the applicability of the theoretical framework, highlighting that fintechs drive institutional changes across stakeholders with different characteristic traits. Based on these results, we created theoretical propositions that guide future studies on the topic of fintechs and institutions. This study’s contributions provide valuable insights for financial policymakers, regulators, and technology providers, particularly regarding the adaptation of regulatory frameworks and technological infrastructures in emerging economies. For policymakers, this study suggests guidelines to foster financial inclusion through fintech initiatives, while managers are encouraged to develop strategies that reduce operational gaps in digital financial services.

1. Introduction

Fintechs represent a multidisciplinary object of research that has sparked the interest of financial market managers and researchers from the economic, management, financial, and technological fields (Zavolokina et al., 2016). In the literature, studies about fintechs discuss different topics, such as mobile internet (Feld et al., 2021; Soloviev, 2018); financial inclusion (Velazquez et al., 2022; Joia & Cordeiro, 2021); cryptocurrency (Zetzsche & Preiner, 2018); blockchain technology (Brophy, 2020); and institutional change (Campanella et al., 2022; Deng et al., 2018; Tarkhanova et al., 2018). Regarding the adaptive process of institutions1 to the dynamism of fintechs, the literature highlights disturbances and, consequently, changes to the institutional system that are generated by the introduction of new technological concepts (Bukhtiarova et al., 2018).

Due to this dynamism, some innovations brought about by fintechs can present risks to the traditional institutional system (Chiu, 2017). Thus, the analyses referring to fintechs and institutions require more amplitude and depth. In Germany, Ruhland and Wiese (2022) emphasize the relevance of fintech collaboration with both the institutional and financial systems. In Canada, Turcan and Deák (2022) highlight fintechs as a vector that pushes Canadian institutions out of their comfort zone, and they point out the importance of exploring the relationship between fintechs and other agents. In Italy, Campanella et al. (2022) understand that the demands regarding the quality of service provided by fintechs (and their perceived risk) have an impact on the satisfaction of Italian consumers. However, despite fintechs exhibiting similar behavior in similar institutional contexts, our study is directed towards understanding this economic agent in other institutional contexts. Upon identifying this gap, Hassan et al. (2023) began the analysis in another institutional context, more specifically, that of Islamic economies. There is no doubt that studying fintechs in other unexplored institutional contexts can increase understanding about this subject, as such, the present study.

The present study focused on an empirical analysis of the Brazilian institutional system. Although analyses regarding fintechs and institutions are topics evaluated in countries with developed economies (Ruhland & Wiese, 2022; Turcan & Deák, 2022; Campanella et al., 2022), it is rare to analyze institutional arrangements and structural changes in emerging economies (Doré & Teixeira, 2023). These countries exhibit specific social and economic characteristics, such as social inequality (Amar & Pratama, 2020). and political instability (Vianna & Mollick, 2018), unlike developed countries. In this sense, the choice of Brazil is justified since, despite exhibiting these characteristics, it is an important emerging country, and it holds particular relevance for market operators, policymakers, and individual investors (Maciel, 2023).

More specifically, we selected the Brazilian financial system for three reasons. Firstly, Brazil is the largest economy in Latin America, with a GDP of 1.894 trillion USD in 2022 (IBGE, 2023). Secondly, the Brazilian financial system exhibits a solid and robust structural organization, meaning that the probability of systemic risks is low, even in critical contexts (da Rosa München, 2022). Finally, since Brazil is a part of the BRICS, it represents a growing economy and counts on a resource exchange framework in order to be a part of this economic block. In fact, the PWC’s economic prediction report singles out Brazil as potentially being one of the five main global economic powerhouses in 2050 (Hawksworth et al., 2017). In this sense, an empirical analysis of the Brazilian context presents aspects that can be replicated in other developing countries with institutional structures that are able to adapt to financial technologies.

Thus, the objective of this article is to empirically highlight the interaction between fintechs and financial system institutions in an emerging country. Although the academic community seeks to systematize the relationship between fintechs and institutions through different perspectives (Ruhland & Wiese, 2022; Bellardini et al., 2022; Feld et al., 2021), this study will use the framework systematized by Tello-Gamarra et al. (2022) as its base, since it presents an integrative approach regarding the agents, stages, and the process of change brought on by the fintechs in the financial system institutions. This analysis will be developed through a case study involving 15 agents of the Brazilian financial system, belonging to the following categories: technology providers, fintechs, regulatory institutions, financial institutions, and consumers. This study’s development included rounds of semi-structured interviews based on an extensive literature review and the analysis of documents available online, such as institutional documents and reports.

This study differs from the other empirical studies about fintechs and institutional perspectives in three ways. Firstly, we utilize a framework that integrates multiple aspects that exist between fintechs and institutions. In this sense, this empirical analysis presents multifaceted aspects concerning the fintech phenomenon in an institutional context. Secondly, previous studies identified specific aspects concerning fintechs and institutions. However, this article is not limited to the study of these two economic agents, integrating evidence from three other economic agents (technology providers, consumers and financial institutions) involved in the Brazilian financial system. Thirdly, this is a boundary study that integrates aspects of finance, management, economics and sociology. Based on this integration, it presents structural proposals regarding the process of institutional change brought on by the fintechs.

2. Fintechs

Through digital transformation and access to technology, the financial market has experienced a recurring entrance of new agents. Considering this, fintechs appeared with the aim of filling gaps pertaining to transaction costs and financial service and product accessibility (Rabbani et al., 2022b; Thakor, 2019; Sylla, 1998). Thus, the study of the fintech phenomenon appears to be evolving since, with the advancement of information technology, the operational activities and data-processing capacity of these new economic agents tend to grow exponentially (Rabbani et al., 2022a; Rehman et al., 2022; Thakor, 2019).

Fintechs translate into a vector for the generation and optimization of business models in the financial system (Zavolokina et al., 2016). They use digital resources to provide consumers with financial services and products with higher aggregated value (Hassan et al., 2022; Zachariadis & Ozcan, 2017). Thus, fintechs present financial innovations to users from different economic layers (Senyo et al., 2021; Uddin et al., 2020). However, despite fintechs earning their space in the market, defining the term “fintech” is still a controversial subject matter, with the result that there is still a lack of consensus regarding this agent’s definition (Puschmann, 2017; Zavolokina et al., 2016).

The term “fintech” is derived from the combination of the terms “financial” and “technology”, which generically represents the connection between modern technology and the financial services sector (Gomber et al., 2017). Due to the wide range of activities that fintechs can encompass, Tello-Gamarra et al. (2022) categorized the term fintech based on three perspectives: products and services, firms, and financial system agents. Based on this categorization, they defined fintechs as “The main agents in the process of innovation within the financial system, which use technology to provide consumers with different financial resources”.

As for the interaction between fintechs and institutions, since it involves the actions of the main agents in financial system innovation, it is relevant to identify in the literature how this process of institutional change occurs. Based on this, it is possible to identify the impact of fintechs on institutions and how this change occurs due to the appearance of fintechs. Thus, describing an integrative approach clarifies in a more encompassing manner how the stages of institutional change occur.

2.1. Institutions: An Integrative Approach

Institutions have the complex task of predicting, managing, and strategically governing the behavior of different actors in the market (Voigt, 2013). North (1990) clearly states that institutions are crucial for restricting and encouraging human activities as well as stimulating economic development. However, understanding the behavior and relevance of institutions is a complex matter (Berger & Luckmann, 2016).

The studies regarding institutions discuss the fact that market institutionalism stems from a determinist structure of organizations (Giddens, 1984; Meyer & Rowan, 1977; DiMaggio & Powell, 1983). Meyer and Rowan (1977) define this structuring of institutional practices as myths that structure the social behavior of agents in a specific market for them to survive. DiMaggio and Powell (1983) see this institutionalization as an isomorphism, which protects organizations from the market’s social pressures. However, despite being protected from external pressures, DiMaggio (1988) points out that new firms have specific interests and beliefs that can encourage institutional change.

In this sense, Douglas North (1991) brought about a perspective that considers institutional change to be a relevant factor in market optimization and transaction cost reduction. This change can represent the appearance of new practices in a sector and the creation of new rules in a specific market (Seo & Creed, 2002; North, 2005). In the financial system, fintechs can represent the vector for these rules, since North (1990) described the market as a “game” and defined the institutions as “the rules of the game”. Furthermore, he described the organizations as players and considered that institutional adaptation to new market trends represents changes to the rules of this game.

North (1990) described the process of institutional change towards an increase in market performance. Thus, through a structure of incentives, institutions build tacit knowledge, which culminates in a phenomenon known as institutional learning. This learning contributes to a change in the habits and customs of market operators, bringing about new informal rules. These informal rules are institutionalized and formalized. And so, the agents of the market can maximize their performance, reduce transaction costs, and, consequently, improve their economic performance (see Figure 1).

Upon evaluating the role of fintechs in this system, Tello-Gamarra et al. (2022) created a framework integrating fintechs and institutions. In this sense, there are four dimensions that are considered responsible for the process of institutional change brought on by fintechs. As such, this process stems from the interaction between the different “players” and emerging technologies, supporting the search for understanding the impact fintechs have on the “rules of the game”.

2.2. The Evolutionary Process of Institutional Change Brought on by Fintechs

Upon evaluating fintechs as a pivotal point for changes in institutions, we identified the quest undertaken by researchers to map these changes through economic, political, and sociological approaches. The technology brought by fintechs creates an evolving change in institutions within the financial system. In the last few years, different models have been developed to explain this interaction between fintechs and institutions. These models were proposed by Bellardini et al. (2022), Ruhland and Wiese (2022), Takeda and Ito (2021), Bollaert et al. (2021), Gomber et al. (2017), and Tello-Gamarra et al. (2022).

Bellardini et al. (2022) investigated how financial institutions react to digital transformation through the direct investment channel and the regulatory structure’s impact on the choice of financing tools. Ruhland and Wiese (2022) emphasized the collaboration of fintechs, considering their financial returns, reputation, and credibility in the financial system. Chen et al. (2023) stated that the fintech sector acts as a net risk receiver and evaluates risk transmission at an institutional level. C. C. Lee et al. (2023) analyzed the impact mechanisms of fintechs in commercial banks, constructing the fintech development index through the dynamic panel-generalized model of moments. Takeda and Ito (2021) reviewed the types of firms that boost fintechs and the benefits derived from innovations brought on by fintechs. Bollaert et al. (2021) summarized how fintechs affect access to financing and the regulatory challenges presented by services such as fintech lending (including peer-to-peer lending), crowdfunding, and ICOs (initial coin offerings). Meanwhile, Gomber et al. (2017) reviewed topics regarding fintechs and digital finances on three dimensions: business functions, technology, and technological concepts and institutions created to offer solutions.

In this study, we will use the framework proposed by Tello-Gamarra et al. (2022) for three reasons: Firstly, these authors systematized the literature pertaining to institutions in categories, they systematized the literature that discusses fintechs alongside institutions, and they presented potential connections with agents of the financial system. Secondly, the authors exhibited an approach integrating the dimensions that systematize literature on fintechs and institutions and the variables that comprise these dimensions, as well as their interaction with the other agents of the financial system when an innovation appears in the market. Thirdly, Tello-Gamarra et al. (2022) highlighted the need for empirical validation of this framework in different institutional contexts, as these generate political and management implications regarding institutional adaptation in extreme contexts (see

Table 1. Dimensions and variables of institutional changes due to fintechs.

Dimensions	Variables	References
Dematerialization of access	Digital literacy Access democratization Financial inclusion	Hadad and Bratianu (2019) Jünger and Mietzner (2019) Ozili (2018) I. Lee and Shin (2018) Cumming and Schwienbacher (2018) Petrushenko et al. (2018)
Operational architecture	Facilitation of P2P resources Financial Incentives Elimination of intermediaries Smart contract creation	Chen and Bellavitis (2020) Jiang et al. (2018) Brownsword (2019) Soloviev (2018) Shkodina et al. (2019) Shkarlet et al. (2018)
Transactional regulation	Integration of regulatory technology Integration of regulatory platforms Integration of regulatory authorities	Gomber et al. (2017) Yang and Li (2018) Irwin and Dawson (2019) Brownsword (2019) Bukhtiarova et al. (2018) Romanova et al. (2018)
Transactional efficiency	Shared economy Security in operations Technological risk management	Zveryakov et al. (2019) Zetzsche and Preiner (2018) I. Lee and Shin (2018) Kraus et al. (2020) Tarkhanova et al. (2018)

Source: Tello-Gamarra et al. (2022).

).

According to the review conducted by Tello-Gamarra et al. (2022), the dimensions are systematized in the following manner: Dematerialization of access has to do with the capability of users to conduct transactions without formal intermediaries, such as physical banks. Operational architecture pertains to how financial operations occur. Transactional regulation refers to the measures that protect operations from risks related to operational changes in transactions. As for transactional efficiency, it has to do with the functioning of financial operations and how fintechs improve them. In this systematization, the authors described how a new technology promoted by fintechs goes through four sequential stages (see Figure 2).

Tello-Gamarra et al. (2022) described how the appearance of a new technology interacts with a structure of incentives and dematerializes access to financial services. After that, the market’s operational architecture is modified and integrates new resources for consumers. These resources become informal rules in the market, but the rules are formalized through the process of transactional regulation. These new rules increase the market’s transactional efficiency, and the economy begins to have an increased availability of capital.

The higher availability of capital is important for the process of institutional change since this capital, if translated into financial incentives, can promote investments in research and development. Thus, the fintechs exhibit important interactions with agents of the financial system throughout this process, since the interaction of new technologies with a structure of incentives and knowledge leads to institutional changes (North, 1990). In this sense, the framework that systematizes this process of institutional change is proposed by Tello-Gamarra et al. (2022), connecting agents and dimensions as seen in Figure 3.

To validate this framework, these dimensions were empirically analyzed with the involvement of representatives from each agent involved in the process. Through the validation of the described dimensions and variables, it is possible to qualitatively describe how fintechs and financial system institutions interrelate, generating institutional change.

3. Method

With the goal of identifying empirical evidence of interaction between fintechs and institutions in an emerging country, we conducted an embedded case study based on Yin (2014). This study followed the following stages: research design, case characterization, data collection, and results analysis and summary (see Figure 4).

3.1. Study Design

This study method has been defined as an embedded case study. An embedded case study involves the examination of subunits of analysis that compose a single unit of analysis (Fletcher & Plakoyiannaki, 2011). According to Yin (2018), it is necessary to rely on a holistic data collection strategy for studying a main case, which is the Brazilian financial system. Thus, we collected data about subunits of analysis.

This study is descriptive and qualitative in nature, seeking to describe characteristics of a phenomenon occurring in an emerging country’s financial system. It is qualitative because it allows us to understand certain phenomena from the perspective of participants that are a part of this environment, in this case, agents from the financial system. It is descriptive due to its usefulness in demonstrating the dimensions of the phenomenon, which in this case is the appearance of fintechs. This study analyzed the Brazilian financial system as a representative of an emerging country.

Regarding institutional arrangements and structural changes, this study is peculiar, as it analyzes emerging economies (Doré & Teixeira, 2023). These countries exhibit specific social and economic characteristics, such as social inequality (Amar & Pratama, 2020) and political instability (Vianna & Mollick, 2018), unlike developed countries.

3.2. Case Characterization

To conduct this study, the main economic agents (embedded cases) of the Brazilian financial system (holistic case) were selected from the following categories: technology providers, fintechs, financial institutions, regulatory institutions, and consumers. Each agent was questioned regarding the theoretical dimensions of our study, which are: Dematerialization of access, operational architecture, transactional regulation, and transactional efficiency. To select the five economic agents, we defined inclusion criteria for each type.

Technology providers: Technology provider firms were selected in accordance with the following criteria: (i) being active in Brazil; (ii) conducting their activities at the nationwide; (iii) providing resources that are applicable in the financial market. In these firms, executives in the CTO (Chief Technology Officer) position provided more detailed data.

Fintechs: To select the fintech managers, we considered both of the following criteria: (i) operating at the national level; and (ii) belonging to one of the five different categories of fintechs according to the Fintech Map created by Finnovation (2019). Among the five categories, we selected the following sectors due to their relevance: Digital banks, Payments, and Investments. Considering this, the different categories provided a multifocal view of the proposed institutional change process.

Financial institutions: The three types of financial institutions that were selected are (i) Banks and Savings Banks; (ii) Credit cooperatives; and (iii) Securities brokers and distributors. The choice to select one representative from each model operating in the Brazilian financial system had to do with the amplitude of the aspects pertaining to fintechs and institutions.

Regulatory institutions: In the analyzed financial system, the Brazilian Central Bank (BCB—Banco Central do Brasil in Portuguese) is the main regulatory institution. In this sense, we selected managers from different departments within the BCB. Since the BCB is composed of nine departments, we selected the following departments according to their relevance to our research topic: (i) Department of the Central Bank’s Financial System Regulation (DENOR); (ii) Department of Cooperatives and Non-Banking Institution Supervision (DESUC); and (iii) Department of Financial Market Competition and Structure (DECEM).

Consumers: Finally, we selected the consumers based on the following criteria: (i) being private individuals; (ii) being Brazilian; (iii) using the services of a fintech at the moment of this study; (iv) having a college degree; and (v) belonging to different social classes. These criteria allow users to make multifocal comments about the topic with a good level of detail, due to their education.

Since we selected three representatives for each of the five economic agents, 15 total participants were selected. While the absolute number of participants may appear limited, their relevance stems from their prominent roles and activities at the national level. It means that their institutional power and their structure are enough for the understanding of how the Brazilian institutional system works. Moreover, the depth and comprehensiveness of the interviews conducted further substantiate the adequacy and significance of the selected sample. Information about the economic agents’ representatives who were interviewed appears in

Table 2. Participants information.

Institution	Position	Headquarter	Characteristics
Technology providers
Technology provider 1	Co-Founder and CTO	São Paulo, BR	SAAS platform provider
Technology provider 2	Edge Specialist Senior Manager	California, US	Edge computing full stack platform
Technology provider 3	Co-Founder and CTO	São Paulo, BR	SAAS platform provider
Fintech
Fintech 1	Founder and COO	São Paulo, BR	Digital Bank
Fintech 2	Founder and CEO	Florianópolis, BR	Investment
Fintech 3	Founder and Senior Advisor	São Paulo, BR	Payment
Regulatory Institution
Regulatory Institution 1	Senior Advisor at DENOR	Brasília, BR	DENOR
Regulatory Institution 2	Technical Manager at DESUC	Brasília, BR	DESUC
Regulatory Institution 3	Associate Director at DECEM	São Paulo, BR	DECEM
Financial Institution
Financial Institution 1	Cooperative Business Manager	Rio Grande do Sul, BR	Credit Cooperative
Financial Institution 2	Senior Operations Specialist Manager	Madrid, ES	Banks and Savings Banks
Financial Institution 3	IT Application Development Manager and Business Specialist	São Paulo, BR	Securities brokers and distributors
Consumers
Consumer 1	Entrepreneur	São Paulo, BR	Entrepreneur
Consumer 2	Research Fellow	São Paulo, BR	Earns twice the minimum wage
Consumer 3	Student	Rio Grande do Sul, BR	Earns minimum wage

Source: Created by the authors.

.

3.3. Data Collection

We defined the data collection process in two different stages: documental analysis and an interview conducted with managers in the field. We conducted the documental analysis through a systematic document review procedure (for both printed and electronic documents). Based on a theoretical review, we created a semi-structured questionnaire to interview the agents. The interviews were conducted with managers from different levels of governance within the company. As an analysis strategy, we conducted a corroboration of the findings (Yin, 2018; Mills et al., 2010). Corroboration consists of the cross-checking of two sets of collected data. In our case, we collected documental data and cross-checked it with the data collected in the interviews. If any data were missing at the time of the interviews, we asked support questions as reinforcement in order to precisely define the results. In this sense, the quotes present in this document result from the cross-checking of the collected data.

The documental analysis consisted of a process to review and evaluate different aspects of the financial system. Based on theoretical references, a semi-structured protocol was established. This protocol was developed with open-ended questions which permit the collection of information about different aspects of fintechs and institutions. In the first stage, different documents were used to conduct a systematic analysis. These documents consisted of letters, news items, reports, and manuals. Afterwards, with the intent to reduce research bias, we cross-checked these data with that of the questionnaire given to the 15 interviewed managers until we reached theoretical saturation. The questionnaire was created based on the selected framework and an exhaustive literature review.

The interview questions were organized in blocks. Each block contained a general question and various specific ones. In order to not confuse the interviewee, each general question was accompanied by specific questions pertaining to each of the major research topics. When the data (documents and responses) did not match, support questions were added until theoretical saturation was reached. According to Mills et al. (2010), gathering and analyzing evidence from multiple sources is recommended for enhancing the quality of case studies. The corroboration of findings from two different data sources adds validity to the issue of interest. During the interview, once one topic was finished, the next one began. All the interviews were recorded and transcribed afterwards. After this stage, a content analysis was conducted to codify the relevant information within a structured perspective. Any information that was unclear was clarified through follow-up questions.

3.4. Data Analysis and Summary

All the data obtained in the interviews were stored in a database to be transcribed and analyzed. Through the interview script, the data were structured within a coherence pattern denominated by Yin (2014) and Mills et al. (2010) as the classic linear structure for embedded case studies. We categorized and grouped the main information from each group of agents based on their respective discourses.

The categorization was composed of three rounds of codification. These three rounds were used with the intent to identify clusters of information based on the quotes from the interviewees. The first-tier codes consisted of the specific identification of relevant quotes for our study. These quotes were broad and literal regarding the interviewees’ statements. The second-tier codes were aligned with the dimensions identified in the literature. In this sense, the codification was aligned with the results of the variable analysis presented in Table 1 for each of the interviewed agents. Finally, the third-tier codes consisted of clusters that grouped the second-tier codes into the most relevant macro points within each of the variables. These points represent the main findings from each dimension.

4. Findings

In this section, we present and analyze the findings we obtained in the study. Considering this, this topic is divided into an analysis of the four dimensions based on each of the interviewed agents’ individual viewpoints. Thus, subdimensions were identified and described in each set of interviews.

4.1. Dematerialization of Access

Regarding the process of dematerializing access to financial products and services, we highlight a structure of incentives for agents to follow the market’s digital transformation process. Due to this process, the financial system exhibits a general concern with presenting artifices that ensure the user is present in this non-material market. In this sense, the dimension of dematerialization of access has digital literacy, access democratization, and financial inclusion as its variables, and its findings are presented in

Table 3. Findings pertaining to the dematerialization of access dimension.

Variables	Digital Literacy	Democratization of Access	Financial Inclusion
Technology providers	- Financial education in a digital environment - Mapping users’ needs - Gamification of financial operations.	- Adapting financial assets - Final consumer access - Small business access	- User trust - Profile analysis - Availability of financial products
Fintechs	- Breaking down the bureaucracy of financial services - Knowledge of digitalized processes - Incentives from the fintechs	- Modifying the financial operation system - Symmetry and centralization of information in platforms	- Changes in service provision - Conducting social measures geared towards inclusion.
Regulatory institutions	- Digitalized population - Taking the financial system to the people - Digital infrastructure	- Changes in physical infrastructure - Impact on the payments market - Impact on the credit market	- Change in the users’ social structure - Impact on the payments market - Impact on the credit market
Financial institutions	- Attention paid by financial institutions to final users - Adaptation of the other market operators	- Increased availability of the platforms - Open Banking	- Low-cost financial products - Volume of financial product users
Consumers	- Transition from the analogical to the digitalized market - Traditional users’ adaptive process	- Influence of new financial products on consumers - Access for users from different social classes	- Internet used for financial services - Internet used to access information

Source: Created by the authors.

.

4.1.1. Digital Literacy

Regarding digital literacy, the five agents emphasized the need to establish a flow of digital information going to the users. In their interviews, different forms of digitalization were pointed out, as well as knowledge of digitalized processes, financial education in a digital context, and the adaptive process undergone by users in a digitalized market within this variable. Financial Institution 2 stated the following:

“A long time ago, talking about applications was something that people only understood as savings, fixed income, something that was barely explored. Nowadays, in the financial market, anywhere you go online […] everything talks about the financial market in a very detailed manner that everyone understands”.

4.1.2. Access Democratization

As for the process of democratizing access to financial services, all the agents highlighted the restructuring of the financial environment and its impact on users from different social classes. When access is democratized, users consume different financial products to which they previously had no access. Financial Institution 2 pointed out that this availability of platforms and digital operations brings about the possibility of democratized access to financial services and products. He explains that

“It is a single channel on the platform to which everyone has the same access. The platform is the same for all. So if I want credit, I go there and I see if there is credit available to me, just like any other person, regardless of social class”.

4.1.3. Financial Inclusion

As a consequence of having access to financial services and products, consumers and small businesses undergo a process of financial inclusion, in which access to credit and financing is equally distributed. In this sense, the cost of accessing financial products goes down, and the structure for supplying financial products changes. Technology Provider 2 highlights the role played by technology in this process, stating that

“The point is to give people without access to credit, access to certain financial products that can benefit then… And what do we do for them? We make their applications more secure and efficient. The larger the public they can reach, the more need they have to hire us, so we have indirect gains”.

Thus, due to web resources, the boundaries for the public with access to financial cards and products is increased by the internet, regardless of the brand.

4.2. Operational Architecture

In the context of the transformation of the financial system’s operational architecture, the interviewees presented the adaptation of strategies, processes, negotiations, and operations to a digitalized structure to make them competitive and current. Such findings were exhibited by the dimensions of facilitation of P2P resource facilitation, financial incentives, elimination of intermediaries, and digital contracts (see

Table 4. Findings of the operational architecture dimension.

Variables	Facilitation of P2P Resources	Financial Incentives	Elimination of Intermediaries	Smart Contracts
Technology providers	- Change in business environment - Digital management	- New processes due to digital resources and partnerships - Reduction in agency and operational costs	- Facilitation of contract execution - Operation cryptography	- Contract execution - Contract cryptography
Fintechs	- Changes in the technological domain - Dynamism of operations	- Influence of authorities on the appearance of new financial activities	- Changes in service provision - Digitalization of payment methods	- Reduction in regulatory framework - Emergence of digital signatures - Changes in the flow of resources
Regulatory institutions	- New operations - New banking correspondents	- Incentive for operational improvements - Exploration of opportunities	- Insertion of digitalized communities - Desire from institutions to migrate to a digital environment	- Digital signatures
Financial institutions	- Elimination of physical currency - Increase in competition - Acquisition of other fintechs	- Payment intermediation means - Process improvement	- Changes in the agency operation model	- Introduction of a technological base in the financial system
Consumers	- Appearance of new processes in the financial system - New model for taxing operations	- Availability for intermediation - Integrity of intermediation	- Economy of resources	- Economy of resources - Control of financial information

Source: Created by the authors.

).

4.2.1. Facilitation of P2P Resources

As for the measures facilitating decentralized transactional resources, the dominance of technology in the transactional environment created changes pertaining to the protocols of communication between companies. In a communication of a transactional nature, for instance, PIX (PIX is a payment method created by the Central Bank of Brazil to transfer funds between accounts instantly, at any time, and without cost) became a highly used payment method in the Brazilian market. Fintech 2 states that “Currently, almost all of our communication happens with API (Application Programming Interface) integration, and that was one of the changes PIX brought, changing the communication protocol”. It is through fintechs that peer-to-peer payment resources can expand.

4.2.2. Financial Incentives

Within a digitalized market, financial incentives are needed for the incorporation of technologies in a more robust manner by a higher number of agents. Among the agents, it was possible to demonstrate the appearance of opportunities for partnerships and the improvement of processes due to the presence of digital resources, which reduce agency costs. For example, Technology Provider 1 understands that these new processes bring about the opportunity to reach markets that have not been touched yet, as described in the following statement:

“For the actual entrepreneurs, you begin to notice that there is the opportunity for a partnership with a certain market that you wouldn’t have access to by yourself. You end up providing the final users with more opportunities, which to them translates into lower prices, more products, and more offers”.

These new market opportunities function as financial incentives, as they make it possible to increase client’s portfolios and the processes that are carried out. However, the interviewee understands that Brazilian regulations use these rules in an attempt to protect possible intermediaries in these operations.

4.2.3. Elimination of Intermediaries

The financial intermediary elimination indicator demonstrated that the facilitation brought by technology connects users directly to service providers without the need for intermediaries. In this sense, the agents pointed out that the institutions are in the process of migrating to a digital environment, with decentralized operations and a reduced number of resources. Regulatory Institution 1 highlights this migration process:

“Now, also based on new regulations, there are other infrastructures in the financial market that belong to depositary registers which are also going digital. There is increased competition with new companies currently acting in this field”.

4.2.4. Digital Contracts

Regarding the appearance of digital contracts, the interviews emphasized the factors of reduced time for contract execution, cryptography, and digital signatures. Through these factors, an entire regulatory base is modified to validate this new contract model. Regulatory Institution 3 explained the rules that link digital contracts to the acquisition of CCBs (Banking Credit Notes) in credit operations. Despite CCBs being an extrajudicial executive title, it is possible to obtain them digitally, thus acquiring them from the bank. Regulatory Institution 2 emphasizes the concern institutions exhibit regarding the integrity of these contracts. He states that

“Of course, the institutions are concerned about frauds. So, they have to specialize themselves in this operation model […] there are advanced systems that conduct identity and identity theft verification”.

Through these supervision systems, it is possible for new processes to be created in the market. As for the dimension of operational architecture, Table 4 summarizes the incentives, variables, and findings of this dimension, which supports new processes that need regulation.

4.3. Transactional Regulation

Regarding the appearance of a new model of transactional regulation, all the agents stated, in different ways, that after the appearance of a structure of informal rules, there is a need to regulate these rules. In this sense, with the intention of conducting the regulatory process, fintechs operate through the interaction between technologies, platforms, and regulatory authorities (see

Table 5. Findings regarding the transactional regulation dimension.

Variables	Integration of Regulatory Technologies	Integration of Regulatory Platforms	Interaction Among Regulatory Authorities
Technology providers	- Defense of government platforms - Used for informational exchanges	- Control of user information - Automation of the authorities’ services	- Authorities’ limitations regarding management - Authorities’ limitations regarding operations
Fintechs	- Security in processing operations - Managing the market alongside the authorities	- Direct interaction with the Central Bank - Open banking	- Regulatory landmarks - Regulatory chamber activities
Regulatory institutions	- Improvement by regtechs - Improvement by suptechs - Reduction in regulatory costs	- New standards of platform-based operation - BCB data management	- Integration of information through API - Change in supervision methods
Financial institutions	- Increase in the latency of financial technologies - Increase in the volume of transaction	- Information input - Formation of partnerships	- Digitalization of closing processes - Use of digital resources in transfers to regulatory authorities
Consumers	- Management and customer service conducted by fintechs - Use of biometry to validate operations	- Transparency of operations - Reduction in operational problems	- Smart reports - Incorporation of technologies from fintechs

Source: Created by the authors.

).

4.3.1. Integration of Regulatory Technologies

When asked about regulatory technologies and their integration into the financial system, the agents emphasized that these tools represent an important instrument for monitoring institutions’ internal and external operations. As such, by using technology, it is possible to map the operations conducted by the users, as well as the institutions’ internal operations, with regtechs and suptechs in improving the institutions’ activities and reducing regulatory costs.

Regulatory Institution 2 states that: “We use many regtechs and suptechs based on artificial intelligence and machine learning in the credit and treasury departments”. Regulatory Institution 1 points out that these technologies “make it easier to supervise things remotely, without needing to be physically present at an agency or institution to conduct the supervision”, which makes it easier to conduct the BCB’s work. Considering this, Regulatory Institution 3 mentioned that regulatory costs went down by more than 90% after the introduction of regulatory technologies.

4.3.2. Integration of Regulatory Platforms

Regarding the interaction between regulatory platforms, fintechs appear to be important resources for the interrelation between platforms, regulatory authorities, and consumers. In this sense, the main points mentioned in the interviews were the automation and direct management of the platforms with the Central Bank and the open banking movement.

Thanks to technology, it is possible to integrate information from different platforms on the same website, which has been made more popular by the open banking movement. From an open banking perspective, the agents highlighted the benefits of regulatory platforms concerning partnership formation and the feed of information that is available. Fintech 2 points out that the payment flow is gradually changing. In this sense, the financial system begins to deal with a model of operations that does not require the direct action of regulatory authorities. Furthermore, open banking is presented as a regulatory landmark where the platforms are connected to an instantaneous payment layer. Fintech 2 states that:

“I do not believe that the regulation itself was broken. It will be broken later on due to open banking. Because we changed this model of transaction percentage fees to a model of transaction fees… And the fintechs are the driving force behind this cost reduction”.

In summation, fintechs see themselves as vectors for the open banking movement, in which they can connect with all institutions and offer services with a greater reach.

4.3.3. Integration of Regulatory Authorities

Among the results obtained pertaining to the integration of regulatory authorities, the agents emphasized the importance of digital resources in the processes of system closing and sending information to regulatory authorities. In this sense, the technologies represented essential factors for data collection by the Central Bank of Brazil (BCB) and file exchanges.

Within the digital processes, some of them were cited by the interviewees, such as the integration of information through APIs. The BCB has direct access to the integration of client data (Banks) and data from companies (varying sectors) to manage and supervise it. Furthermore, new resources, such as cookies, artificial intelligence, and biometry, were cited by the consumers. From the perspective of perceived usefulness, Consumer 1 emphasized the use of artificial intelligence for management and customer service when stating that: “artificial intelligence is always there. It does not depend on that specific time, between 10 a.m. and 3 p.m., it’s there 24 h a day”. And Consumer 3 cites the use of “biometry to validate operations”. However, all of them believe that there is still much to be developed in this market.

Considering this, the agents suggested a boost to increase competitivity in the Brazilian financial market. The Central Bank paid attention to this factor when it created a department of competition in the financial market, since competition encourages efficiency in the Brazilian market. Table 5 summarizes the different approaches taken by the agents of the financial market regarding the perspectives discussed in this dimension.

4.4. Transactional Efficiency

When asked about the transactional efficiency dimension, the agents explained that, after formal regulation, there is the need to improve processes. In this sense, the fintechs interact with the institutions to promote transactional efficiency through the shared economy, operation security, and technological risk management (

Table 6. Findings pertaining to the transactional efficiency dimension.

Variables	Shared Economy	Security in Operations	Technological Risk Management
Technology providers	- Evaluation systems - Integration among users	- Posture of the players in this market - Data protection	- Technology related to information leaks - Filling the user knowledge gap
Fintechs	- Improvement of financial resources - Modification of the traditional transactional model	- Cybersecurity usage - Adherence to the LGPD	- Optimization of risk exposure
Regulatory institutions	- Impact on the payments market - Spread optimization	- Open banking - Data protection measures	- Regtechs as a vector of risk management
Financial institutions	- Modifications to customer service	- Banking secrecy - Biometry	- Higher profitability of investments - Presence of robots
Consumers	- Massification of technology in the financial system - Generation of trust among the users	- Evaluation programs - Control over a large volume of data	- Mechanisms for preventing virtual crimes - Increased traceability of the financial market

Source: Created by the authors.

).

4.4.1. Shared Economy

As for the shared economy, the interviewees emphasized that technology decentralizes the current transactional model. In the interviews, we highlighted the change in the flow of financial resources with group payments and shared operations and their impact on the banking spread, bringing about a modification of the transactional model.

As an example, Regulatory Institution 3 details this change in the transaction model and flow of resources:

“There are many things in the banking spread that the financial institution must cover. One of them is the institution’s own costs, its funding costs, deposit costs, and operational costs… Then, if you compare it with the banks, there are the opportunity costs, inflation costs, the operation’s liquidity premium. For the fintechs, this type of operational cost matters the most. So operational costs were significantly reduced. And not just fintechs, but any institution that decides to invest in digitalizing its processes ends up getting returns pertaining to its costs”.

4.4.2. Security of Operations

When asked about the security of operations, all participants emphasized that, among the security aspects of the current market, data security plays an important role. In this sense, all interviewees cited the importance of the General Data Protection Law (Lei Geral de Proteção de Dados—LGPD) in maintaining banking secrecy of information.

For example, Regulatory Institution 3 states that due to the LGPD, in an ecosystem containing open banking, there is the matter of consenting to the sharing of the information used in the transactions, leading to the existence of a whole technical part geared towards how data are shared in open banking.

Furthermore, the agents cited resources such as biometric registration, digital authentication, and evaluation systems supporting this digital management model. These resources help users feel safer, as stated by Consumer 2:

“My mother raised me, telling me to not talk to strangers. Now, I get into an unknown person’s car just because he has five stars… So I think that technology plays a fundamental role in creating this bridge and this confidence”.

4.4.3. Technological Risk Management

Within the logic of technological risk management, the agents cited technological advents, such as the appearance of regtechs, robots with artificial intelligence for conducting financial analyses, and operation cryptography. In this sense, the findings connected to this variable are applied to IT governance models. Technology Provider 3 mentions measures pertaining to this governance model:

“We try to work with cryptographed client data, which makes it much more difficult for others to access our base. Double authentication is a factor that also helps customers protect themselves in their operations”.

Thus, with resources such as artificial intelligence, the market tends to reach increasingly higher levels of efficiency. In this sense, there is the appearance of a culture of innovation in the financial system geared towards the continued increase in its efficiency. Table 6 presents the findings pertaining to transactional efficiency.

Within the section that describes the impacts of fintechs on the other institutions of the financial sector, it was possible to highlight that there is support for an innovation culture, which leads to new rules being institutionalized. In this sense, the increase in economic performance is brought on by automation and risk management. This performance ensures that the system as a whole has resources to provide a number of incentives. In this study, it was possible to note that in the long term, this economic structure provides incentive for a general change within the system.

5. Contributions

The findings contribute with a set of insights pertaining to the agents that are present in the financial market and interact directly with fintechs. This information is discussed and compared to the current status of the research. In the comparison, the data are categorized to validate the framework base, which integrates the perspectives of the five agents in the four dimensions. Considering these results, propositions are made based on the described analyses.

5.1. An Integrative Framework

Based on the findings, we found evidence of the four dimensions present in the framework developed by Tello-Gamarra et al. (2022), which are present in the Brazilian financial system. They appear in a cyclical manner. When each new technology, process, state or strategy appears in the market, the same cycle repeats itself (Hodson, 2021). This cycle is repeated for all agents but in a sequential manner, and the appearance of innovations in this market represents a source of ignition.

From the moment innovations enter the market, technology suppliers are responsible for transforming this innovation into material technology that is applicable in the market (Chen & Bellavitis, 2020). The implementation of new technological concepts is faster in agents with a more flexible institutional structure. In this sense, fintechs represent agents that have a stronger tendency to implement these new concepts, due to their organizational model being based on the implementation of technologies in the financial sector (Rahman et al., 2025).

As the fintechs validate the applicability of a new technological concept, a new, informal rule emerges in the financial market. In response to the stimulus generated by the validation of this informal rule, regulatory institutions develop an adaptive structure to formalize this new rule. Consistent with Muganyi et al. (2022), this adaptation process indicates an institutional response to technological incentives, demonstrating the relevance of regulatory technologies (regtechs) in shaping institutional structures. Thus, the regulatory institutions exhibit the four dimensions in the process of adapting current regulations to fintech activities.

This new institutional environment, which includes new technological concepts formalized by the regulatory institutions, accelerates the market. These concepts permit the growth of competitivity between new entrants and traditional institutions. This competitiveness aligns with assertions in the literature highlighting fintechs’ ability to reduce informational asymmetries and operational costs, thereby promoting market competitiveness (Huang et al., 2020). In this sense, financial institutions adjust their operations to this new market context, which enables a consumer service delivery model that competes with organizations that have a higher level of institutional flexibility. For this adjustment to happen, the financial institutions go through the four dimensions.

Finally, consumers, in general, begin to have access to said financial service, promoted both by fintechs and traditional institutions. This process happens faster for those who consume these financial products through fintechs since, due to their flexible structure, they are able to offer innovative services earlier. When these services are formalized and offered by all financial institutions, the more conservative consumers begin to exhibit evidence of the four dimensions in their practices. In this sense, fintechs have the capability to swiftly democratize financial resources, especially benefiting lower-income and previously underserved segments (Carlos et al., 2024; Qureshi et al., 2021). Figure 5 shows a more detailed framework of this process within the logic of the different agents, considering the dimensions that were previously mentioned.

In fact, all four dimensions are reflected in all financial system agents in the process of institutional change. This process may originate from an external impact on the institutional system, such as the introduction of a new technology, or it may be endogenous, such as the development of a new process.

In both cases, the four dimensions are present in all of the agents. Since the agents are heterogeneous, the results exhibited distinct characteristics for each of them, which were classified among the characteristics explained in this document. Due to the heterogeneity of the five agents and the specificity of their practices, the four dimensions present characteristic traits in their results. Thus, each dimension has a specific characteristic tied to the findings of each type of agent. These traits demonstrate that the findings from the four dimensions may present the dominant traits of learning, digital structuration, strategy, accessibility, or security (Figure 6).

In the dematerialization of access dimension, the technology providers present characteristic traits pertaining to digital structure, as they highlight the structuring of a digital environment, gamification of operations, asset adaptation, and product availability. The fintechs exhibited characteristic traits linked to strategy due to the change in operational regimes, elimination of bureaucracy, and social measures geared towards user inclusion. The answers from representatives of the Brazilian regulatory institution showed characteristic traits connected to the digital structure, emphasizing changes in the physical structure for providing financial products, as well as in the social structure of digitalized product users. The characteristic trait highlighted by the financial institutions is that of accessibility, since they emphasize open banking, platform availability, and financial products with lower costs. The consumers presented characteristic traits of learning, since they highlighted the user’s adaptive process, the transition from an analogical market to a digital one, and the access to this technology for users from different social classes.

Regarding the operational architecture dimension, the technology providers presented traits pertaining to strategy when they demonstrated changes in the business environment, digital management, the optimization of contract execution, and operation cryptography. As for the fintechs, their answers contained traits that characterize learning, considering the technological domain, payment digitalization, the use of digital signatures, and changes in the flow of resources. The departments of the regulatory institution also highlighted learning through new operations, new correspondents, and the exploration of new opportunities. The financial institutions exhibited strategic traits in this dimension as they discussed the elimination of paper money, the acquisition of other fintechs, the implementation of the decentralized payment method (PIX), and changes to the operational model. The consumers’ answers highlighted traits pertaining to accessibility, such as changes in operational fees, integrity in intermediation, control of financial information, and the economy of material resources.

As for the transactional regulation dimension, the technology-provider firms included in their findings pertain to counter-attack technology, service automation, and improving control of information, with their answers trending towards digital structure. The fintechs’ answers showed traits linked to security, with points such as authority management, regulatory chambers, and secure processing. The regulatory institutions exhibited traits tied to strategy, such as the reduction in regulatory costs, information integration (using APIs), platform operation, and the implementation of regtechs and suptechs. The findings connected to the financial institutions show traits linked to digital structure, such as transfer digitalization, as well as processing and structuring for higher latency in operations. The consumers mentioned points such as the use of artificial intelligence in customer service and biometry for validating operations, with answers that reflected the characteristic traits of digital structuring.

Finally, in the transactional efficiency dimension, the answers given by the technology providers showed traits pertaining to security, with findings tied to data protection, evaluation systems, and anti-leak technology. The fintechs’ answers demonstrated characteristic traits of digital structure, including topics such as the improvement of transactional resources and cybersecurity. The Brazilian regulatory institutions’ departments exhibited accessibility as the characteristic trait of their answers, discussing points such as open banking, spread optimization, and risk management by regtechs. The financial institutions presented digital structure as the characteristic trait of their answers, encompassing biometry, the presence of robots, traceability, and digital resources for banking secrecy. The consumers’ answers showed traits of security, touching upon evaluation programs, data control, traceability, and virtual crime prevention.

In summation, the framework based on the literature review mentioned in Section 2.2 demonstrated coherence with respect to scientific validity. However, the empirical findings presented in Figure 5 characterize the dimensions according to each agent. Based on such factors, it is possible to clarify that all agents underwent a process of institutional change geared towards an increase in the country’s economic performance, with characteristic traits exhibited in Figure 6. Based on these findings, we present three propositions pertaining to the process of institutional change analyzed in this study.

5.2. Propositions

Through the framework used for the empirical analysis, this study detected three propositions pertaining to the evolutionary process of the institutional system caused by fintechs. Firstly, due to the fintechs’ accelerated growth, which was strengthened during the pandemic, there was an increase in the flow of user migration from the traditional market to the digital one (Carlos et al., 2024; Conlon et al., 2020; Hassan et al., 2020; Ji et al., 2020; Kim et al., 2025). This growth flow put the institutions in a responsive position regarding the innovations promoted by the fintechs. Thus, we identified a difficulty faced by the institutions in behaving as the protagonists in light of the fintechs in the context of an emerging country, due to their regulatory standards.

Within this study, we noted that the regulations that govern institutions in the financial system are restrictive and, many times, make abrupt changes to their manner of operation impossible. On the other hand, fintechs are included in more flexible regulatory standards, which brings about a series of innovations in the market. Anagnostopoulos (2018) points out that institutions still take perfunctory measures to adapt to fintech growth. However, to the market’s benefit, competition can be encouraged by incorporating technology into financial market institutions. Tarkhanova et al. (2018) state that the automated economy fosters institutional changes. Thus, these findings and references serve as base for the following proposition:

Proposition 1.

The financial system’s institutions must evolve at the same rate as financial technology.

Additionally, fintechs have made the financial system’s modus operandi more dynamic and accessible. In this sense, the offer of financial products is modified, bringing new concepts to the market and to the institutional matrix, especially after COVID-19 (Kim et al., 2025; Chang et al., 2020; Qian et al., 2020; Sahay et al., 2020). These new concepts brought by fintechs force the institutional matrix to operate based on the market’s precepts and not on formal regulations (Pazarbasioglu et al., 2020; Zveryakov et al., 2019). These services provided to clients by the fintechs bring about concepts such as self-service and branchless operations. These concepts are supported by technological tools such as artificial intelligence, biometry, and blockchain, which bring about a change in financial service models (Adamyk et al., 2025; Vives, 2019). This change caused by technology has aspects that are beneficial to consumers, such as inclusion and competitivity regarding financial services (Xie & Zhu, 2022).

Thus, due to the offer of financial services by fintechs not having to follow such a rigid regulatory model in emerging countries, fintechs can incorporate digitalized operational technologies faster in the financial market (Hassan et al., 2022). These digital resources incorporated by the fintechs have an impact on institutions in the financial market, forcing the regulatory institutions to adapt their statutes to the new model of operation. After this adaptation, these resources arrive at the financial institutions so that they can promote them to their customers. In rigid regulatory contexts, this adaptation only occurs after these operations are formalized by financial system authorities. In this sense, the offering of digital products by fintechs to consumers in an emerging country tends to occur in accordance with Figure 7.

Considering this structure, it is possible to substantiate the following proposition:

Proposition 2.

Consumers of fintech services in emerging countries have access to digitalized products before consumers in the traditional market.

Finally, it is possible to understand that the financial market has grown and become plural due to this institutional change brought on by fintechs. This study reports that the evolutionary process of institutional change occurs through the dimensions of dematerialization of access, operational architecture, transactional regulation, and transactional efficiency. Stemming from these dimensions, new findings were cited that support the next dimension. These products showed a correlation with the dimensions presented in Figure 1 based on the analyses of North (1990, 1991, 2005), which are based on a structure of incentives, institutional learning, new informal rules, formal rules in the market, and the improvement of economic performance (see Figure 8).

This cycle is presented in Figure 8, demonstrating that the dematerialization of access to financial products occurs based on a structure of incentives. This dematerialization sparks a process of institutional learning in the financial market. The financial system’s operational architecture is modified based on this learning structure, generating new, informal rules in the market. These rules undergo the process of formalization through transactional regulation. These formal rules focus on increasing transactional efficiency, leading to an improvement in the country’s economic performance. Based on this performance improvement, the institutions will have more resources to structure new incentives in this market. Thus, the cycle repeats itself, and the following proposition appears:

Proposition 3.

The process of institutional change caused by fintechs is cyclical in nature, repeating itself with the introduction of each new technology.

With new incentives for the introduction of new technologies, the dimensions of the process of institutional change caused by fintechs repeat themselves, interacting with the process described by North (1990). In summation, the different evolutionary dimensions described in this study demonstrate their coexistence with North’s institutional analysis (North, 1990, 1991, 2005). The process of institutional change brought on by the fintechs and geared towards an increase in the financial system’s performance and its dimensions presented important requirements to the institutions in question. Similarly, they involve the institutions’ adaptations to guarantee the financial system’s health. In this sense, this document projects a future research line discussing the topic of fintechs and institutions.

6. Final Considerations

This study aimed to empirically demonstrate the interaction between fintechs and institutions of the financial system in an emerging country, Brazil. To this end, a case study was conducted with different agents of the financial system with the goal of understanding the fintech phenomenon’s impact on the institutional environment.

The first contribution consisted of the empirical validation of the framework proposed by Tello-Gamarra et al. (2022), which describes the change to the institutional model proposed by the fintechs. Since this model evaluates the agents of the financial system from an adaptive viewpoint, this study analyzed how the dimensions appear to each of the agents. This study empirically validated the dimensions and highlighted that for each agent of the financial system, the dimensions exhibit different characteristic traits. These dimensions evolve at the same rate as the financial sector’s technology, which may present new guidance pertaining to the characteristics of each dimension.

The second contribution is the improvement and discussion of the proposed framework. This new discussion used institutional documents in corroboration with semi-structured interviews, conducted until saturation and convergence with technology providers, fintechs, regulatory institutions, financial institutions, and consumers to evaluate the impact of fintechs on their institutionalized activities. Thus, this study highlights evidence of how fintechs can be the vectors for change in each agent’s service provision and in consumer experience. Through new technological concepts incorporated by the fintechs, it is expected that this market’s evolution will reach unknown levels in the next few years.

Finally, the third contribution was the formulation of three theoretical propositions that substantiate the institutions’ behavior in face of the fintechs’ evolutionary process. This process is described in detail, identifying the need for a reformulation of the financial system’s institutional model due to the incorporation of these technologies. For this reason, the propositions mentioned modifications to the financial system regarding the process of incorporating fintechs into the market and its relationship with the current institutional theory. This study is unprecedented and provides a broad view of how scientific literature has been describing this evolution.

Concerning this study’s practical implications, in digital finance, we pointed out implications for public policy and management. Regarding the implications for public policy, digital finance is the fusion of digital technologies and traditional finance, permitting a wider reach that includes populations that had previously been ignored in the financial sector, through a model that is closer, more transparent, efficacious, and efficient (Rao et al., 2022; Jain & Gabor, 2020). In this sense, fintechs can play a central role for sectors that are usually excluded from the system to benefit from the financial system, consequently reducing social inequality. Thus, policymakers can design and implement regulations to encourage the emergence of more fintechs that mitigate the traditional financial exclusion of the lowest economic classes. Furthermore, policymakers can dictate regulations to increase the financial system’s transparency and efficiency, which will benefit all agents regarding costs, efficiency, supervision, and regulation.

As for the management implications, and since digital finance allows people and businesses to access payment, savings, and credit services through the internet (online) (Ozili, 2018), (1) fintech administrators can develop strategies to improve their customers’ digital financial experiences. As such, they can provide them with services that are more accessible, secure, and inexpensive. On the other hand, (2) financial institution administrators need to learn from fintechs, so that consumers can have broader and better access to their products and services. This decentralized access accelerates the market in a manner that directly affects the liquidity of financial institutions on the market. In this sense, this study helps regarding market positioning, since it reveals that if a financial institution does not advance towards the modernization of its processes, it loses a market share to the fintechs. As for the management issues, (3) this study demonstrates that the legal flexibility fintechs experience in their markets is favorable to the evolution of operations and processes, and it is up to financial administrators to implement strategies to equalize this market.

Regarding this study’s limitations, the findings that are presented are related to the adopted research criteria. Consequently, the theoretical base used to formulate the questionnaire was based only on agents that fulfilled the criteria, which may vary in contexts with different criteria. Furthermore, the responses were those of managers and consumers and may have been biased based on the activities performed by the respondents. Another limitation is that the findings are contingent upon the present state of the Brazilian economy, subject to potential shifts in institutional dynamics at the researchers’ discretion. Therefore, it is advisable to replicate this study in other emerging economies. Consequently, the outcomes presented in this research are specific to a particular context and may vary across global regions. Substantiating these data in developed countries may bring up different behaviors. These behaviors may explain more aspects of this new institutional structure. Thus, the suggestion is to compare the proposed framework in different institutional contexts, beginning with an emerging economy and going on to developed economies. Based on this new framework, exploratory and descriptive studies can generate implications for different sectors of the economy.