From Ratios to Algorithms: Empirical insights into Fintech-Driven Sustainability in Indian Banks

Abstract

Objectives: This research aims to investigate the empirical significance of Financial Technology (FinTech) in increasing the growth and sustainability of green finance at Indian banks. It attempts to research whether FinTech would deepen, broaden, and increase transparent and effective green finance activities in banks to support and advance India’s sustainable development strategies.

Research Design: The research used a quantitative research design using secondary data to conduct research for Indian listed banks in the period from 2015 to 2024 through two distinct phases of analysis: 1) a traditional ratio-based analysis using SPSS; and 2) a computational analysis using Python along with the Pandas, NumPy, and Scikit-learn libraries. The explanatory factors were determined using the FinTech Adoption Index (FTAI) and Green Finance Development Index (GFDI) factoring along with the control factors determined by bank size, capital adequacy, profitability and non-performing assets, and so the modeling of the effects was conducted using multiple linear regression, Random Forest, and Support Vector Regression (SVR) for analysis of linear and non-linear effects..

Results: The findings demonstrate a very strong positive correlation between FinTech adoption and green finance outcomes. The models that included FinTech adoption were stronger explanatory models (R² = 0.68) whereas traditional models were only medium-level (R² = 0.47), but were still legitimate support for FinTech-inferred innovations (such as AI informed credit risk scoring, blockchain compliance, and digital lending) that increased envirnmental sustainability and transparency. The results also support the view that computer-based analysis does not succeed in acquiring the multi-dimensions of impacts with traditional ways of approaching green financing.

Recommendations: This paper emphasizes the need for Indian regulators and banks to develop strategic frameworks for sustainable finance that incorporate FinTech. Policymakers, such as the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) for example, will need to support digital innovation, facilitate green disclosures, and support sustainability initiatives led by FinTech.