Fintech represents technologically enabled financial innovation that can lead to the development of new business models, applications, processes, or products with an associated material effect on financial markets and institutions and the provision of financial services. This disruptive innovation increases the competition and risks in the market. To maintain supervision, a stronger degree of market discipline is extremely important. It acts as an external corporate governance mechanism where stakeholders (investors, customers, and others) use information and risk assessment to influence the behavior of financial institutions. Market characteristics affect the vulnerability of the financial system. Additionally, cybersecurity threats, which are inherent to the digital nature of fintech, brings potential threat to disrupt financial stability. Banks plays a pivotal role in ensuring the financial stability of an economy. Therefore, the study aims to examine the intricate relationship between fintech startup and financial stability of banks, focusing on the multifaceted factors that influence this dynamic. By integrating theories of disruptive innovation, competition fragility, and information asymmetry, the study aims to understand whether the emergence and growth of fintech startups contribute to enhancing or undermining the stability of the financial systems. Through the application of econometric modeling, and using panel data analysis the study will provide empirical evidence on the pathways through which fintech startups affect financial stability, offering valuable insights for policymakers, regulators, and industry stakeholders. The findings are expected to contribute to the development of informed policies and strategies that balance fintech innovation with the need to maintain a stable financial environment.

Keywords: Fintech startups, Financial Innovation, Financial stability, Market Discipline, Cybercrime