Chapter 9: Financial technology and consumer financial behavior
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This chapter reviews research to date concerning the association between financial technology (“FinTech”) and consumer financial behavior. A total of 63 studies were reviewed concerning various forms of FinTech, such as Personal Financial Management (PFM) apps and digital loans, and consumers’ budgeting and spending, use of credit, debt management, saving, and investing. Early evidence suggests that use of FinTech is associated with improved budgeting, repayment, and saving behavior and increased access to credit. However, it is unclear whether FinTech is having a net positive impact among lower-income consumers and/or consumers with lower levels of financial literacy, while some evidence points to the role of FinTech in promoting overspending and overborrowing and exposing consumers to predatory practices. New research is needed concerning the use of artificial intelligence and bias in financial services, to correct for endogeneity via self-selection, and to further illuminate whether FinTech is mitigating or exacerbating economic marginalization.

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