Does Fintech Usage Improve or Impair Financial Behavior? Evidence from Indian Millennials

Abstract

The fintech revolution has transformed the landscape of personal finance, yet its impact on personal financial behavior remains underexplored. The present study examines how fintech usage influences the relationship between financial literacy and behavior among Indian millennials. Using a proprietary dataset, the study employs PLS-SEM to assess the moderating role of fintech usage on the impact of financial literacy on financial behavior, considering both objective and subjective dimensions of financial literacy. The findings indicate that while financial literacy positively influences financial behavior, using fintech weakens this association. This negative influence is especially evident among over-confident users who lack sufficient financial knowledge. The direct impact of fintech usage on financial behavior is also negative, showcasing the need for fintech services that complement users’ financial literacy and promote financially healthy behaviors. These findings shed light on the darker side of fintech adoption and have significant implications for policymakers, fintech service providers and consumers, emphasizing the need for tailored financial literacy programs that promote responsible fintech usage and encourage financial discipline.