FinTech in the financial system: Towards a capital-intensive and high competence human capital reality?

Digital transformation has generated a multifaceted shift in the financial industry through financial technology (FinTech). This study focuses on the effect that a series of the most impactful technological tools adopted by banks have on their business model, with a special focus on the evolution of human capital and traditional capital intensity in the sector. To our knowledge, the latter represents a gap in current intellectual capital literature that our paper aims to fill by investigating the impact of digital transformation on human capital efficiency and intensity in the European banking system. Our data on 1,250 banks in the European Union suggest the banking sector is going through a transformation of its very core business model, further translated into improved efficiency and profitability. Evidence highlights a shift of banking institutions towards a more capital-intensive model, contradicting centuries-old business traditions, as well as a simultaneous rise in the competency level and intensity of highly qualified human capital that shape the new model.