The emergence of FinTech ecosystems and their disruption of traditional banking models through artificial intelligence innovation

While many traditional banks have developed standalone electronic payment activities as a way to innovate and respond to fintech or digital challenger banks, these legacy institutions do not have the technological skills or the associated spirit of innovation that fintechs or neobanks can bring to financial services. As a result, the emergence of local fintech ecosystems and the digitalization of finance and banking more broadly require an urgent response by banks (Kshetri, 2017; Lee & Shin, 2018; Li & Zhang, 2021). This response is either an approach of collaboration, where neobanks and fintechs offer parts of services that can be white-labeled and offered through bank platforms, or an approach of major transformation accelerated internally through the use of information technology and artificial intelligence and by focusing on user experience. Of course, the first approach leads to a kind of commoditization of banking and implies reduced margins on basic payment services. However, the fintech ecosystem also offers banks an opportunity to reinvent themselves through the support of other fintechs and the development of a platform strategy based on the banks’ long-standing relationships of trust with their customers.Fintech is a broad term that encompasses innovative technologies that companies use to better manage financial operations and services by streamlining, automating, and delivering them to consumers and businesses, and their variety includes any type of innovation in financial services like the provision of loans and credit, investment management, payments and remittances, payments and accounting, insurtech, tax preparation, etc. The creation of a fintech ecosystem in a country is a process that usually takes time to develop, with more or less favorable conditions. These conditions correspond to various factors that make up the country's attractiveness for the degree of financialization of a country, the maturity of digital ecosystems, the characteristics of local markets, and their demographics.