The Dynamics of Financial Technology Risk on Green Finance within the Modern Banking System

Abstract

This study aims to analyze the relationship between technology financial risk (FinTech risk) and green finance in the modern banking system. Through a literature review approach to the literature of the last five years, this study identifies the interaction between digital innovation, banking stability, and green finance in the context of financial sustainability. The study's results demonstrate that FinTech plays a crucial role in enhancing the efficiency, inclusivity, and transparency of the green financing process by digitizing transactions and leveraging smart data. However, technological developments also pose new risks such as liquidity disruptions, cyberattacks, algorithmic errors, and financial volatility that can affect the stability of the banking system. Financial stability is a key factor in ensuring the effectiveness and sustainability of green finance in the midst of rapid digital transformation. The research emphasizes the importance of adaptive risk governance, collaboration between regulators, industry, and financial institutions, and strengthening macroprudential policies to maintain a balance between innovation and sustainability. With proper risk management, FinTech can serve as a key catalyst in the transition to a green, inclusive, and globally competitive financial system