What Keeps People Using Fintech Despite Fraud Risks?

Digital financial services are transforming how people conduct transactions, but their expansion is exposing a critical challenge: users must navigate the convenience of digital payments while managing persistent threats involving fraud, scams, unauthorized access, and account misuse. New research from Bangladesh suggests that cybersecurity knowledge, perceptions of platform safety, and personal security practices are associated with fintech participation, while confidence in financial institutions alone may not explain continued engagement.

The study, titled "Coping with Digital Risk in Urban Bangladesh: Fintech Adoption Across Different Levels of Usage Experience," was authored by M. Sirajul Islam, Tawsif Shafayet Ali, Suntu Kumar Ghosh, and Md. Mahfuz Ashraf and published in the journal FinTech. Drawing on responses from 357 fintech users, the researchers examined how cybersecurity literacy, perceived security, institutional trust, and protective behavior relate to digital financial engagement across different levels of usage experience.

The findings reveal a more complicated relationship between security and fintech adoption than conventional assumptions suggest. Users reporting stronger cybersecurity capabilities, greater confidence in platform security, and safer transaction practices also reported higher fintech engagement. However, the study found no statistically significant direct association between institutional trust and adoption after accounting for other factors, while longer usage experience did not establish reliably different security-related relationships.

Digital Finance Is Expanding, but Security Risks Are Reshaping User Decisions

Bangladesh provides a revealing setting for examining the relationship between financial technology and digital security. Mobile payments and digital wallets have become increasingly common, yet consumers operate in an environment where suspicious transaction attempts, fraudulent activities, and concerns about customer protection complicate their financial decisions.

The study emphasizes that access to digital infrastructure should not be confused with meaningful financial participation. Mobile connectivity, account ownership, and active digital financial transactions represent different dimensions of technology adoption, and progress in one does not necessarily guarantee progress in another.

National indicators illustrate these distinctions. Bangladesh recorded internet usage of 53.4% in 2024, while 45.3% of adults had made or received digital payments in the preceding year according to the 2021 financial participation measure used in the study. Mobile subscriptions exceeded 100 per 100 people, but these figures count connections rather than unique users.

Comparisons with selected Asian and European economies also reveal substantial differences in connectivity, income, and digital payment participation. However, the researchers caution that national indicators provide context rather than explanations for the behavior of their urban survey respondents.

Conventional technology-adoption models have largely emphasized usefulness, ease of use, and conditions that facilitate access. These considerations become less comprehensive when users must simultaneously evaluate whether their transactions are secure, whether platforms adequately protect their information, and whether institutions can respond effectively when problems arise.

The researchers therefore examined existing fintech users rather than people encountering digital financial services for the first time. Their investigation focused on continued engagement, reported security practices, and perceptions of protection within a population already familiar with digital transactions.

Cybersecurity Literacy and Perceived Safety Show the Strongest Connections to Fintech Use

The research identified significant positive associations between fintech adoption and three factors: cybersecurity literacy, perceived platform security, and secure user behavior. Their standardized statistical coefficients were 0.236, 0.383, and 0.250, respectively, indicating that each retained a positive association after the other variables were considered.

Perceived fintech security recorded the largest direct coefficient among the adoption predictors. Respondents who considered financial applications reliable and protective of transactions tended to report greater engagement with digital financial services. However, the researchers distinguish perceived security from independently verified technical protection.

Cybersecurity literacy also emerged as an important component of financial participation. The concept encompasses knowledge of online threats, awareness of suspicious activities, and confidence in taking protective action. Its relationship with reported secure user behavior was particularly pronounced, producing a coefficient of 0.493.

Protective practices examined in the study included using strong and non-reused passwords or PINs, enabling two-factor authentication, avoiding unfamiliar payment links, and refraining from conducting financial transfers over public Wi-Fi. Respondents reporting stronger cybersecurity literacy also tended to report greater adherence to these precautions.

The researchers additionally identified a statistically significant indirect association between cybersecurity literacy and fintech engagement through secure user behavior, estimated at 0.123. This finding suggests that security-related knowledge and protective practices are connected within the broader pattern of fintech participation.

However, the analysis does not demonstrate that acquiring cybersecurity knowledge causes people to adopt safer practices or subsequently increase their fintech usage. Continued financial technology use could itself be associated with greater familiarity with security precautions, and the cross-sectional design cannot establish which development occurs first.

Another qualification concerns the strength of individual predictors. Although the overall statistical model accounted for 61% of the variation in reported fintech adoption within the surveyed sample, the incremental explanatory contributions of cybersecurity literacy, perceived security, and protective behavior were individually small.

The findings support the relevance of these security-related characteristics without establishing that any single factor dominates fintech participation or can independently deliver substantial increases in usage.

Institutional Trust and User Experience Challenge Conventional Assumptions

One of the study's most revealing findings concerns institutional trust. Confidence in financial providers, regulatory protection, and mechanisms for resolving complaints might reasonably be expected to accompany greater digital financial participation. Yet the researchers found no statistically significant direct association between institutional trust and fintech adoption after accounting for the other variables.

The estimated coefficient was −0.011, with a p-value of 0.870, indicating that the proposed direct relationship was not supported. Institutional trust nevertheless showed a significant positive association with secure user behavior, suggesting that confidence in institutional arrangements and reported protective practices were related.

The indirect association between institutional trust and adoption through protective behavior did not reach conventional statistical significance. The researchers also observed substantial overlap between institutional trust and perceived platform security, making it difficult to isolate their independent statistical contributions.

These findings do not establish that financial regulation, consumer protection, or institutional credibility are unimportant. Rather, they demonstrate that institutional trust did not independently explain fintech engagement within the specified model after related security characteristics were considered.

The researchers also investigated whether fintech experience changes these relationships. Participants were divided into three groups: those using fintech for less than one year, between one and three years, and more than three years.

Some estimated associations appeared stronger among particular experience groups, potentially suggesting differences in familiarity or security-related behavior. However, none of the nine primary comparisons achieved statistical significance under two-sided testing at the 5% level.

An additional analysis using four more detailed experience categories similarly failed to establish robust differences after accounting for multiple statistical comparisons. The patterns also did not consistently strengthen with longer usage duration.

Consequently, the study provides insufficient evidence that the relationships between cybersecurity literacy, perceived security, institutional trust, and fintech participation systematically change with experience. It also cannot establish whether individuals become more security-conscious through repeated fintech use because different respondents were observed only once.

Financial Inclusion Requires Security Capabilities, but the Evidence Demands Caution

The findings offer useful direction for financial technology providers seeking to improve customer engagement without overlooking digital risks. Clear explanations of authentication procedures, suspicious links, and safe transaction practices align with the security-related dimensions associated with continued fintech participation.

For regulators and policymakers, the research highlights the importance of examining customer protection beyond general perceptions of institutional confidence. Accessible complaint handling, fraud reporting, and dispute resolution remain relevant areas for investigation, particularly because the study measures confidence in institutional arrangements rather than their actual effectiveness.

Cybersecurity education also emerges as a potential consideration for digital financial development. However, the researchers do not establish that literacy interventions cause increased fintech adoption, making practical evaluation essential before assuming that awareness campaigns will produce measurable improvements in financial participation.

The study's methodological strengths include established measurement instruments, reliability assessments, and statistical checks examining whether comparisons across experience groups were defensible. Its additional sensitivity analyses provide a more cautious interpretation than conclusions based solely on apparent differences between estimated coefficients.

Several limitations nevertheless restrict broader interpretation. Of the 357 respondents, 77.3% lived in Dhaka, 76.2% were aged between 18 and 27, and 68.1% were students. This concentration limits the relevance of the findings to older consumers, rural communities, and people with weaker digital connectivity.

The survey also relied on self-reported information rather than independently observed protective behavior, verified fraud incidents, or objective platform-security assessments. Its adoption measure combined recent use, future intentions, and preferences for continued engagement, rather than isolating the initial decision to adopt fintech.

A clearer understanding of the relationship between security awareness and financial participation will require research beyond existing users and self-reported behavior. Broader samples, actual transaction records, and long-term observations could reveal whether experience strengthens security knowledge and whether better safeguards translate into increased financial engagement.