Harnessing Technology to Drive Smarter Financial Decision Making

Authors

  • Lalu Rizal Ihwandi Universitas Gunung Rinjani
  • Fredrick Onyango Aila Maseno University
  • Rian Destiningsih Universitas Tidar

DOI:

https://doi.org/10.61536/escalate.v3i01.288

Keywords:

Smart Finance, Financial Literacy, Artificial Intelligence, Big Data, FinTech

Abstract

This study investigates the impact of technological adoption—specifically artificial intelligence (AI), big data utilization, and FinTech platform usage—on optimal financial decision-making, with financial literacy positioned as a mediating variable. Using a quantitative research design and data collected from financially active individuals, the model was analyzed through Partial Least Squares Structural Equation Modeling (PLS-SEM). The results reveal that big data utilization exerts both direct and indirect positive effects on financial decision-making through enhanced financial literacy. While AI and FinTech do not demonstrate significant direct impacts on financial literacy, their indirect effects through literacy pathways are supported. Furthermore, financial literacy is confirmed to play a vital role in mediating the relationship between technology and decision-making outcomes. These findings underscore the need to integrate financial education with technological advancements to ensure users can effectively leverage smart finance tools. The research contributes to the growing body of literature on digital financial behavior and offers actionable insights for developers, educators, and policymakers aiming to foster financially competent users in an increasingly digitized economy.

Downloads

Download data is not yet available.

References

Alaa, M., Nasiri, M., & Rahmani, M. (2022). The role of AI in digital banking transformation: A review. Journal of Business Research, 146, 345–356. https://doi.org/10.1016/j.jbusres.2022.03.035

Allgood, S., & Walstad, W. B. (2016). The effects of perceived and actual financial literacy on financial behaviors. Economic Inquiry, 54(1), 675–697. https://doi.org/10.1111/ecin.12255

Agwu, M., Adeleke, I., & Ayoade, S. (2023). Impact of artificial intelligence on consumer financial decision-making. Journal of Financial Services Marketing, 28(3), 123–140. https://doi.org/10.1057/s41264-022-00145-2

Bianchi, M. (2018). Financial literacy and investment behavior. Journal of Banking & Finance, 87, 1–15. https://doi.org/10.1016/j.jbankfin.2017.10.012

Boukherouaa, S., Boudiaf, M., & Djezairi, A. (2022). Digital technologies and the future of finance: A bibliometric analysis. Technological Forecasting and Social Change, 180, 121693. https://doi.org/10.1016/j.techfore.2022.121693

Chen, M. A., Wu, Q., & Yang, B. (2021). How valuable is FinTech innovation? The Review of Financial Studies, 34(5), 2062–2106. https://doi.org/10.1093/rfs/hhaa123

Du, K., Li, Z., & Lai, K. K. (2020). Financial technology and corporate financial decisions: An analytical review. Finance Research Letters, 35, 101570. https://doi.org/10.1016/j.frl.2020.101570

Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39–50. https://doi.org/10.1177/002224378101800104

Gomber, P., Kauffman, R. J., Parker, C., & Weber, B. W. (2018). On the FinTech revolution: Interpreting the forces of innovation, disruption, and transformation in financial services. Journal of Management Information Systems, 35(1), 220–265. https://doi.org/10.1080/07421222.2018.1440766

Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2021). A primer on partial least squares structural equation modeling (PLS-SEM) (3rd ed.). Sage Publications.

Haddad, C., & Hornuf, L. (2019). The emergence of the global FinTech market: Economic and technological determinants. Small Business Economics, 53(1), 81–105. https://doi.org/10.1007/s11187-018-9991-x

Huang, G., Yu, T., & Zhang, X. (2023). AI and finance: Revolutionizing asset management through machine learning. Decision Support Systems, 165, 113879. https://doi.org/10.1016/j.dss.2022.113879

Jagtiani, J., & Lemieux, C. (2019). The roles of alternative data and machine learning in FinTech lending: Evidence from the LendingClub consumer platform. Financial Management, 48(4), 1009–1029. https://doi.org/10.1111/fima.12295

Kraus, S., Breier, M., & Dasí-Rodríguez, S. (2021). The economics of artificial intelligence: A review of the literature. Technological Forecasting and Social Change, 166, 120635. https://doi.org/10.1016/j.techfore.2021.120635

Li, Y., Zheng, S., & Wang, H. (2022). Exploring how digital transformation influences firm performance: The mediating role of financial decision-making. Information & Management, 59(3), 103582. https://doi.org/10.1016/j.im.2021.103582

Lusardi, A., & Mitchell, O. S. (2017). How ordinary consumers make complex economic decisions: Financial literacy and retirement readiness. Quarterly Journal of Finance, 7(3), 1750008. https://doi.org/10.1142/S2010139217500082

Nguyen, T. H., Ngo, L. V., & Tran, B. X. (2022). Big data analytics and financial performance: Evidence from the banking sector. Journal of Business Research, 146, 450–460. https://doi.org/10.1016/j.jbusres.2022.03.058

Nunnally, J. C., & Bernstein, I. H. (1994). Psychometric theory (3rd ed.). McGraw-Hill.

Ozturk, A., & Cavusoglu, M. (2023). Digitalization and strategic financial decision-making: The mediating role of analytics capabilities. Technovation, 118, 102647. https://doi.org/10.1016/j.technovation.2022.102647

Potrich, A. C. G., Vieira, K. M., & Kirch, G. (2018). How well do women do when it comes to financial literacy? Evidence from Brazil. International Journal of Consumer Studies, 42(6), 645–657. https://doi.org/10.1111/ijcs.12468

Sarstedt, M., Ringle, C. M., & Hair, J. F. (2020). Treating unobserved heterogeneity in PLS-SEM: A multi-method approach. In Partial Least Squares Structural Equation Modeling (pp. 197–225). Springer. https://doi.org/10.1007/978-3-030-80519-7_9

Shahbaz, M., Wang, J., & Ali, M. (2020). Big data analytics in finance: A systematic literature review. Journal of Economic Surveys, 34(5), 1023–1061. https://doi.org/10.1111/joes.12368

Siddiqui, A., Khan, R., & Ghani, U. (2021). Financial decision-making in the era of artificial intelligence. International Journal of Finance & Economics, 26(3), 4520–4533. https://doi.org/10.1002/ijfe.1942

Vives, X. (2019). Digital disruption in banking. Annual Review of Financial Economics, 11, 243–272. https://doi.org/10.1146/annurev-financial-100719-120853

Wamba-Taguimdje, S. L., Fosso Wamba, S., Kala Kamdjoug, J. R., & Tchatchouang Wanko, C. E. (2020). Influence of artificial intelligence (AI) on firm performance: The business value of AI-based transformation projects. Business Process Management Journal, 26(7), 1847–1873. https://doi.org/10.1108/BPMJ-10-2019-0412

Downloads

Published

2025-08-07

How to Cite

Rizal Ihwandi, L., Onyango Aila, F., & Destiningsih, R. (2025). Harnessing Technology to Drive Smarter Financial Decision Making. Escalate : Economics and Business Journal, 3(01), 38–48. https://doi.org/10.61536/escalate.v3i01.288

Issue

Vol. 3 No. 01 (2025)

Section

Articles

License

Copyright (c) 2025 Lalu Rizal Ihwandi, Fredrick Onyango Aila, Rian Destiningsih

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.