The Impact of Fintech Innovation on Investor Behavior from the Perspective of Behavioral Finance

Abstract

The rapid development of fintech over the past decade has dramatically changed global financial markets and profoundly influenced investor behavior. This paper examines the impact of fintech innovation, particularly robo-advisors, blockchain technology, and social trading platforms, on investor behavior through the lens of behavioral finance. By reviewing the existing literature, this paper explores how these techniques affect decision-making processes, market efficiency, and investor biases such as overconfidence, loss aversion, and herding behavior. The study found that through algorithms and automated investment management, robo-advisors can mitigate certain behavioral biases, but can also introduce new challenges, such as over-dependence. The inherently volatile and decentralized nature of blockchain technology and cryptocurrencies magnifies speculation and introduces new biases. Social trading platforms, while democratizing access to financial markets, have exacerbated herding behavior and short-term speculation. The study identifies gaps in current research, including the need for long-term impact studies and ethical considerations, and suggests directions for future research, such as exploring new behavioral biases and improving regulatory frameworks. Overall, fintech innovation offers great potential for improving market efficiency and financial inclusion, but it also presents new challenges that require ongoing investigation and adaptation strategies.