Communication dynamics: Fintech's role in promoting sustainable cashless transactions

The global financial landscape is undergoing a dramatic transformation driven by Fintech integration and evolving communication strategies. This shift is fundamentally altering traditional financial engagement, with cashless transactions (CLT) becoming increasingly central. This study focuses on the critical role of Fintech use in driving CLT adoption, particularly among small business owners and individuals in the informal sector in Pakistan's Punjab province. This group often lacks access to formal financial services, making understanding the impact of Fintech crucial for financial inclusion and broader socioeconomic development (SED). The research explores the mediating role of individuals' intentions to use cashless transactions (IUCT) in connecting Fintech use to the actual use of cashless transactions (AUCT). It also considers the moderating effects of financial literacy (FL) and personal innovativeness (PIN) on this relationship. The study's significance lies in its potential to illuminate pathways through which Fintech catalyzes economic transformation and promotes sustainable CLT, ultimately leading to improved livelihoods and social development for underserved populations. The selection of small business owners and informal sector workers in Punjab is strategic, reflecting their significant economic contribution, frequent financial exclusion, and the diverse socioeconomic and cultural landscape of the region. The study aims to provide a comprehensive understanding of how Fintech usage, intentions, CLT adoption, FL, PIN, and SED intersect within this specific context. Understanding these dynamics is crucial for informing policies and strategies to promote financial inclusion and economic growth in underserved communities.

The study's theoretical foundation rests on the Unified Theory of Acceptance and Use of Technology (UTAUT) model and its extension, UTAUT2. UTAUT2's core constructs—performance expectancy (PE), effort expectancy (EE), facilitating conditions (FC), perceived usefulness (PU), and price value (PV)—are adapted to explore Fintech's influence on IUCT. The model is further extended by incorporating FL and PIN as moderators, acknowledging that individual characteristics shape technology adoption. The study's unique contribution lies in extending the UTAUT2 framework to connect Fintech-driven AUCT to financial inclusion and SED, highlighting the transformative potential of Fintech adoption. The literature review supports the hypotheses that PE, EE, FC, PU, and PV positively influence both IUCT and AUCT. The study also proposes that IUCT mediates the relationship between these Fintech use variables and AUCT, and that FL and PIN moderate this relationship.

This research employed a dual methodology: Partial Least Squares-Structural Equation Modeling (PLS-SEM) and Propensity Score Matching (PSM) using a Probit model. Stage I utilized PLS-SEM to analyze the complex relationships between Fintech use variables, IUCT, AUCT, FL, and PIN. This stage aimed to identify the mediating role of IUCT and the moderating effects of FL and PIN. The data was collected using a questionnaire survey administered to 394 small business owners and informal sector workers in Punjab, Pakistan. The questionnaire was translated into Urdu to accommodate the linguistic and cultural context of the respondents. After excluding incomplete or identical responses, a final set of 394 valid responses was analyzed. PLS-SEM allowed for examining both direct and indirect effects, including mediation and moderation. Stage II utilized PSM with a Probit model to assess the impact of AUCT (as a measure of financial inclusion) on SED. The PSM technique addressed potential selection bias by creating matched samples of CLT adopters and non-adopters, controlling for confounding variables. This stage facilitated the estimation of the average treatment effect of AUCT on SED outcomes such as sustainable livelihood (SLD), growth in living standards (GLS), and social development (SDT). Radius matching, stratification, and kernel matching techniques were employed to ensure robust results. Statistical software SmartPLS and Stata were used for the PLS-SEM and PSM analysis respectively. The reliability and validity of the measurement model were assessed using indicator loadings, Cronbach's alpha, composite reliability, average variance extracted (AVE), and the Fornell-Larcker criterion. Variance Inflation Factor (VIF) was used to address potential issues of multicollinearity and common method bias. The structural model was evaluated using bootstrapping techniques.

The PLS-SEM analysis revealed significant positive relationships between PE, EE, FC, PU, PV, and both IUCT and AUCT. IUCT significantly mediated the relationships between all five Fintech use variables and AUCT. Financial literacy (FL) and personal innovativeness (PIN) significantly moderated the relationships between Fintech use variables and AUCT. The inclusion of FL and PIN as moderators significantly increased the explanatory power of the model by 12.1%. The PSM analysis showed that CLT adoption significantly and positively impacted SLD, GLS, and SDT for small business owners in the Punjab province. Specifically, adopting CLT resulted in a substantial increase in SLD (ranging from 39.7% to 52.1%), GLS (ranging from 59.3% to 74.4%), and SDT (ranging from 42.5% to 48%). The study also found that among the demographic variables examined only education level had a significant positive effect on CLT adoption. Gender, marital status, and region also showed a significant influence but less impact on CLT adoption.

The study's findings directly address the research questions by demonstrating the significant role of Fintech in promoting sustainable CLT and its subsequent positive impact on SED. The mediating role of IUCT highlights the importance of shaping individuals' intentions through targeted communication and education. The moderating effects of FL and PIN underscore the need for tailored interventions to enhance financial literacy and promote a culture of innovation. The significant positive impact of CLT adoption on SED indicators provides strong evidence of the transformative potential of Fintech in improving the livelihoods and well-being of small business owners and individuals in the informal sector. The study's findings align with existing literature on technology adoption and financial inclusion but also extends it by providing empirical evidence from a specific context with a focus on under-served populations. The greater explanatory power of the model with the inclusion of FL and PIN underscores that individual characteristics significantly shape behavior and should be taken into account when designing interventions to promote financial inclusion.

This research contributes significantly to the understanding of Fintech's role in promoting sustainable cashless transactions and driving socioeconomic development, particularly within the context of Pakistan's Punjab province. The study empirically supports the extended UTAUT2 model, highlighting the mediating role of intentions and the moderating effects of financial literacy and personal innovativeness. The positive impact of cashless transaction adoption on sustainable livelihoods, living standards, and social development underscores the transformative potential of Fintech-driven financial inclusion. Future research should explore the generalizability of these findings across different regions and economic sectors, investigate additional moderating factors, and employ qualitative methods to gain deeper insights into the individual experiences and perspectives surrounding Fintech adoption and cashless transaction usage.

The study's findings are primarily limited to the Punjab region of Pakistan. This geographical focus may restrict the generalizability of the results to other contexts with differing socioeconomic structures and cultural nuances. The study's concentration on small business owners and informal sector workers might also introduce sampling bias, as their motivations and challenges could differ from those in formal sectors. The cross-sectional nature of the data prevents causal inferences. Future research could address these limitations by expanding geographical scope and including a broader range of economic sectors. Furthermore, qualitative research methods could provide richer insights into the complexities of Fintech adoption and its impact on individuals' lives.