The Heterogeneity of Bank Responses to the Fintech Challenge

Previous studies researching the impact of fintech on mortgage lending have focused primarily on comparing fintech lenders to traditional bank lenders. We examine how bank lenders have responded to the growth of fintech lending, both as a whole and in terms of small and large banks, for both credit access and credit availability. In terms of credit access, fintech reduces total lending of traditional banks, the brunt of which is carried by small banks. This effect is greater for all banks in the refinancing sector. In the home purchase sector, mortgage costs increase for both types of banks in the presence of more fintech, but this effect is not seen in the refinancing sector. We view our results as evidence that fintech acts as a direct competitor to traditional banks in the refinancing sector of the mortgage market, but fragments the market in the home purchase sector