Strategic innovation: exploring governance drivers of FinTech investments

Purpose: The innovation brought by FinTech is strategically transforming the business models of banking entities, their operational efficiency and their relationship with customers and stakeholders. Although the financial drivers behind FinTech investments have been extensively explored, there remains a gap in the extant research regarding the influence of governance factors on these kinds of investments. This study seeks to address this gap by investigating whether and how governance composition and characteristics are associated with investments in FinTech projects, exploring a sample of Cooperative Credit Banks (CCBs) operating in Italy, a unique context where these small institutions represent more than half of the banking sector and that often face difficulties in adopting innovative and digital tools. Design/methodology/approach: This study adopted a quantitative approach. Specifically, multiple regressions analyses were performed on a sample of 230 Italian CCBs during the period 2017–2022. Findings: We find that the presence of a corporate social responsibility committee, managers with high IT skills, Board’s gender diversity, younger generation of managers and their educational level can significantly stimulate FinTech investments. Originality/value: The study contributes to enriching the literature on FinTech and digital transformation in the banking sector, offering particular insights for regulators and managers of CCBs, who are particularly sensitive to innovation matters and increasingly inclined to strategically satisfy the needs of a 4.0 clientele.