Efficiency measurement of fintech companies: a two-stage DEA approach

Abstract

FinTechs have gained an important place in the financial sector with their dynamic and customer-oriented structures and innovative approaches and business models. In recent years, the competition between actors in the financial sector has intensified. In a rapidly developing sector, where competition is intense and challenging, efficiency is a very important performance indicator for fintechs. This study aims to measure and examine the efficiency performance of FinTech companies. Data Envelopment Analysis was used for efficiency measurement. By establishing a two-stage data envelopment analysis model, profitability, marketability and overall process efficiencies of fintechs were measured and analyzed. Efficiency of FinTechs operating in eight different sub-sectors was measured for the period of 2010-2019. The results show that, fintechs' profitability efficiency performances are higher than their marketability efficiency performances. Besides, efficiency performance of the fintech companies differs on the basis of sub-sectors. This paper is a pioneer study in efficiency measurement of FinTechs.