Journal of Economics, Finance and Accounting Studies (JEFAS) ISSN: 2709-0809 DOI: 10.32996/jefas Journal Homepage: www.al-kindipublisher.com/index.php/jefas Page | 91 Financial Technology as Determinants of Bank Profitability Henny Medyawati 1 ✉ Muhamad Yunanto 2 and Ega Hegarini 3 12 Associate Professor, Faculty of Economics, Gunadarma University, West Java, Indonesia 3 Lecturer, Faculty of Computer Science and Information Technology, Gunadarma University, West Java Indonesia ✉Corresponding Author: Henny Medyawati, E-mail: henmedya@staff.gunadarma.ac.id ARTICLE INFORMATION ABSTRACT Received: 08 September 2021 Accepted: 04 October 2021 Published: 14 October 2021 DOI: 10.32996/jefas.2021.3.2.10 This study analyzes the influence of financial technology on the financial performance of banks listed on the Indonesia Stock Exchange (IDX) during the 2014-2020 period. Financial technology was measured by the number of Automated Teller Machine (ATM) transactions and internet and mobile banking, while bank profitability was measured by Return On Assets (ROA). Furthermore, this study used the panel data regression analysis, with the Automated Teller Machine (ATM) transactions as well as internet and mobile banking as the independent variables, and ROA as the dependent variable. Purposive sampling was used to select six banks as samples. The results showed the fixed effect as the most suitable model, where ROA is affected by the internet and mobile banking, while the TM technology has no effect. KEYWORDS ATM, FinTech, Internet banking, Mobile banking, Return On Asset (ROA) 1. Introduction 1 The Financial Services Authority or Otoritas Jasa Keuangan (2017) defined Fin-tech as an innovation in the financial services industry that utilizes technology. Fin-tech products are a system built to conduct specific financial transaction mechanisms. In Indonesia, Fin-tech is regulated by the Bank Indonesia Regulation No. 19/12/PBI/2017 concerning Financial Technology Implementation. The regulator divides Fin-tech into payment systems, market support, investment and risk management, loans, financing and capital provision, and financial services. This study focuses on the payment system, where Fin-tech simplifies transactions using a card and an internet network. The Association of Indonesian Internet Service Providers (APJII) survey showed an annual increase in internet users in Indonesia. There were 132.7 million internet users in 2016, 143.2 million in 2017, and this increased by 64.8% to 171.17 million in 2018. Moreover, the number increased by 73.7% to 196.7 million users in the second quarter of 2019-2020. However, the banking industry must improve its financial technology services to enable customers to make transactions from home due to the Covid-19 pandemic in 2020. Fin-tech influences company performance in payments, clearing, and settlement systems. Although cryptocurrencies would become increasingly popular, they are unlikely to replace fiat currencies. In line with this, Kamil (2018) discussed the South Sumatra BPD, which issues e-money as financial inclusion in the region. E-money increases the use of electronic payments as a source of fee-based income. Consequently, customers are subjected to monthly administration fees and receive interest-free debt financing proportional to the e-money balance. In this case, community consumption is increased by a rise in producers' profit, affecting financial performance (Kamil, 2018). Previous studies showed the positive and negative effects of Fin-tech on financial performance. According to Tunay, Tunay, and Akhisar (2015), internet banking positively relates to bank performance in Europe. This is because internet banking practices are superior in European countries, implying stronger bank performance. Moreover, developed countries have more sophisticated internet proponents and comprehensive technology use. Bagudu and Roslan (2017) examined 22 commercial banks in Nigeria. The results showed that mobile banking positively affects bank financial performance because customer impatience increased significantly with more prior knowledge. Also, the banking industry must adopt and use mobile banking services in its operations, seen from the increased daily use of the internet and gadgets. Sinambela and Rohani (2017) stated that internet banking does not Copyright: © 2021 the Author(s). This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC-BY) 4.0 license (https://creativecommons.org/licenses/by/4.0/). Published by Al-Kindi Centre for Research and Development, London, United Kingdom.