The Real Fintech Revolution Could Be Green, Inclusive and Regulated

The global rush to digitize finance is presented as a shortcut to greater inclusion, faster innovation and more sustainable investment. However, new research from Jordan suggests that technology alone does not deliver those outcomes. What matters is whether banks can convert digital investment into institutional capability, and whether regulators create a framework that directs those capabilities toward sustainable finance.

The study, "The Digital–Sustainable Finance Nexus: Fintech, Green Finance, and Inclusive Growth in Emerging Economy," by Ali Matar of Jadara University, was published in the Journal of Risk and Financial Management. It examines how fintech adoption, green finance and financial inclusion interact in Jordan through a mixed-methods design covering banks, households and financial-sector stakeholders.

Fintech adoption is positively associated with green finance, but the relationship is not automatic: it appears to operate through banks' digital maturity, data analytics capabilities and skills. Regulatory support strengthens that connection, while perceived market demand does not emerge as a statistically significant force in the study's bank-level analysis.

Digital Investment Matters Only When Banks Can Turn Technology Into Capability

Researchers surveyed 21 of Jordan's 23 licensed banks, conducted a nationally representative survey of 1,500 households, including an oversample of 500 refugee-headed households, and carried out 28 interviews with regulators, bankers, fintech executives and development partners. At first glance, the bank-level findings support the widely held view that digitization and sustainable finance reinforce each other. Fintech adoption showed a positive and statistically significant relationship with green finance enhancement, with a coefficient of 0.249, while the simple correlation between the two variables was 0.38. Banks that were more digitally integrated also tended to report stronger green-finance activity.

The more important finding, however, lies underneath that headline relationship. Once the researchers introduced "absorptive capacity", defined through digital maturity, data analytics proficiency and digital skills, the direct relationship between fintech adoption and green finance became statistically non-significant, while the indirect pathway remained significant.

The distinction matters enormously for development policy. Buying new software, expanding digital payments or increasing IT expenditure does not necessarily produce green lending or climate-aligned investment. Digital systems become development assets only when institutions have the knowledge, skills and processes required to use them for new purposes, such as assessing environmental risk, structuring green loans or developing sustainability-linked products.

This is particularly relevant for banks in developing economies, where digital transformation can move faster than institutional learning. A bank may possess modern platforms but still lack the technical expertise to evaluate renewable-energy projects, price climate risks or monitor environmental performance. The study therefore shifts attention from technology acquisition to capability formation, a far more demanding, but also more actionable, policy agenda.

Regulation, Not Consumer Demand, Is Doing the Heavy Lifting

Perhaps the study's strongest policy finding concerns the role of regulation. The interaction between fintech adoption and regulatory support was positive and highly significant, with a coefficient of 0.411. In other words, fintech was more strongly associated with green-finance development in banks that perceived the regulatory environment as clear and supportive.

On the other hand, perceived market demand did not significantly strengthen the fintech–green-finance relationship. The authors interpret this as evidence that green-finance markets in Jordan may still be too immature for consumer demand to provide a strong commercial signal. Interview evidence reinforces this interpretation: customers may not ask explicitly for "green loans," even when they seek financing for solar panels or energy-efficient equipment.

The result should not be read as proof that demand does not matter. The researchers themselves warn that the insignificant finding could reflect the small bank sample, measurement limitations or low consumer awareness. Still, the pattern is important because it suggests that in early-stage sustainable-finance markets, waiting for demand to pull institutions forward may be unrealistic.

For policymakers, this strengthens the case for credible green taxonomies, disclosure standards, technical assistance and supervisory guidance. Regulation in this context is not simply a constraint on innovation; it can reduce uncertainty and help banks decide where to direct digital investment. The study's implications extend well beyond Jordan to other emerging markets where climate-finance demand may be latent rather than visible.

The Biggest Opportunity Lies Where Digital, Green and Inclusive Finance Converge

The household-level findings broaden the argument from banks to consumers. People who used both digital and green financial products were more likely to have formal accounts and to use a wider range of financial products. The logistic model reported an odds ratio of 1.72 for the interaction between fintech usage and green-product usage, while the OLS model reported an interaction coefficient of 0.50 for the number of products used.

This does not establish that green fintech automatically causes inclusion, but it points toward a strategically important market segment. Products that combine digital delivery with environmental benefits, such as pay-as-you-go financing for efficient appliances, solar systems or climate-resilient assets, may simultaneously address affordability, access and sustainability.

For governments and development agencies, it creates a case for designing programs around multiple objectives rather than treating financial inclusion, climate finance and digitalization as separate policy silos. For banks and fintech companies, it points toward business models that can reach underserved customers while financing assets that reduce energy costs, climate vulnerability or resource consumption.

However, the upside comes with risks. Digital lending can deepen exclusion if algorithms reproduce biased data, while green labels can become marketing tools without credible standards. Data privacy, over-indebtedness, digital literacy and greenwashing therefore need to be considered alongside innovation. The study explicitly argues that consumer protection and oversight must accompany efforts to scale digitally enabled sustainable finance.

The Real Development Lesson Is About Institutions, Not Apps

The findings require careful interpretation. The bank-level sample contains only 21 institutions, and each bank was represented by a single executive respondent. The data are cross-sectional, which means the analysis can identify associations and mediation patterns consistent with the proposed framework but cannot prove that fintech investment causes green-finance growth.

There is also a presentation inconsistency that deserves attention. The methodology discusses the 2015–2024 period and refers to panel techniques, while the limitations section clearly describes the bank dataset as cross-sectional with one observation per bank. This does not invalidate the reported associations, but it reinforces the need to treat causal claims cautiously and highlights the value of longitudinal follow-up research.

The study's broader contribution is nevertheless significant. It challenges a common assumption in development policy: that digitalization is inherently transformative. Technology can lower costs and expand reach, but it does not decide how capital is allocated, who benefits or whether new financial products advance climate and inclusion goals. Those outcomes depend on institutions, incentives and governance.

For the Global South, this may be the most important lesson. Countries investing heavily in digital public infrastructure, fintech ecosystems and sustainable-finance frameworks should not treat them as parallel reforms. The greater opportunity lies in connecting them, building bank capabilities, setting clear green standards, protecting consumers and designing products that serve development needs as well as commercial ones.