FinTech and Institutional Disruption: A Systematic Literature Review on Innovations and Transformation in Finance

Abstract

The purpose of this systematic literature review is to explore how financial technology innovations are transforming and disrupting the traditional financial industry and remodeling the global finance ecology. Applying the PRISMA 2020 model, we systematically reviewed 24 empirically based and peer-reviewed articles released between 2015 and the year 2025 from Scopus and Google Scholar databases. Findings shows how FinTech advances such as artificial intelligence, blockchain, machine learning and digital payments are reshaping financial transactions by improving efficiency, inclusion and transparency. Yet such technological transformations also bring new challenges, such as cybersecurity risks, data privacy issues and systemic risks. The findings underscore the role, that macroeconomic stability, financial access and technological readiness play in developing FinTech; while overregulation, infrastructural gaps and institutional weaknesses constrain scalability and innovation. Additionally, regulatory regimes that are more adaptable, pro-innovation and innovation friendly like sandboxes and innovation hubs are shown to balance financial innovation with systemic stability. The research suggests that FinTech-led change can only be sustained through joint efforts between regulators, financial institutions and technology providers. Digital and financial literacy, advanced cyber security measures, as well as trust in the consumer are all key to inclusive and resilient digital finance. The review highlights that sustainable growth of FinTech relies on synchronizing technological development with regulatory flexibility and institutional capability. Future studies might investigate how regulatory flexibility, digital literacy and organizational collaboration collectively affect technology adoption.