Financial Literacy as A Moderating Variable in The Effect Of Financial Technology Adoption on Financial Performance

Abstract

The rapid development of financial technology (fintech) has transformed the operational landscape and business strategies of Micro, Small, and Medium Enterprises (MSMEs) and financial institutions worldwide. Although fintech adoption is touted as a key driver of improved financial performance, several empirical findings indicate inconsistent impacts driven by variations in users' understanding of financial instruments. This study aims to analyze the effect of fintech adoption on financial performance, with financial literacy as a moderating variable. Using a quantitative explanatory approach, data were collected through a structured survey of business managers and analyzed using Partial Least Squares -based Structural Equation Modeling (PLS-SEM). The results are expected to comprehensively map how the adoption of digital payment technology, peer-to-peer lending, and digital system-based risk management impact revenue and operational efficiency. Furthermore, the moderation analysis proves that a high level of financial literacy significantly strengthens the positive impact of fintech adoption on financial performance. Users with adequate financial literacy are able to minimize the risk of cybercrime, optimize working capital management, and make more precise investment decisions. The practical implications of this research emphasize the importance of synergy between fintech service providers, regulators, and business actors in designing massive financial education programs to maximize the potential of the digital economy.