When FinTech Competes for Payment Flows

We study the impact of FinTech competition in payment services when a monopolist bank uses payment data to learn about consumers' credit quality. Competition from FinTech payment providers disrupts this information spillover. The bank's price for payment services and its loan offers are affected. FinTech competition promotes financial inclusion, may hurt consumers with a strong bank preference, and has an ambiguous effect on the loan market. Both FinTech data sales and consumer data portability increase bank lending, but the effects on consumer welfare are ambiguous. Under mild conditions, consumer welfare is higher under data sales than with data portability.