Accounting Conservatism in Financial Technology: Theoretical Foundations, Applications, Benefits, and Challenges
Article Sidebar
Main Article Content
Abstract
This paper examines the evolving role of accounting conservatism in the FinTech-driven transformation of the banking sector, focusing on Banca Comercială Română (BCR) as a case study. Rooted in prudence and verification principles, accounting conservatism remains a key mechanism for mitigating risk and enhancing the reliability of financial reporting. As BCR continues its digital transformation through online banking, mobile payments, and blockchain-based transaction verification, the interaction between technological innovation and conservative accounting practices becomes increasingly complex. Using data from 2020 to 2023, this study finds that BCR’s adoption of conservative provisioning and prudent asset valuation contributed to a 21% reduction in digital loan default rates and a 30% improvement in transparency indicators. However, the study also identifies challenges arising from automation, regulatory adaptation, and potential over-conservatism that may slow innovation. The findings highlight the importance of conditional and adaptive conservatism as a balanced framework to sustain financial stability and investor confidence in rapidly digitalizing financial markets.
Metrics
Article Details
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Banca Comercială Română. (2023). Annual report and sustainability strategy 2023. BCR Group. https://www.bcr.ro.
Basu, S. "The conservatism principle and the asymmetric timeliness of earnings." Journal of Accounting and Economics, 1997, (24)1: 3-37.
Beaver, W.H, and S. G. Ryan. "Conditional and unconditional conservatism: Concepts and modeling." Review of Accounting Studies, 2002, 10(2-3): 269–309.
Bhutta, U, et al. "Intellectual structure and evolution of accounting conservatism research: past trends and future research suggestions." mdpi.com, 2021, 11(2).
Casciello, Raffaela, Marco Maffei, and Fiorenza Meucci. "Bank accounting conservatism and capital management." Journal of Applied Accounting Research, 2025, 48(1).: 708-731.
Christensen, David S. "The Seeds Of Accounting Conservatism." European Journal of Business and Management Research, 2023, 37(2): 181-185.
Deloitte. FinTech risk and regulatory framework in North Africa: Trends and implications. Deloitte Insights, 2021, https://www.deloitte.com.
Fülöp, Melinda Timea, Dan Ioan Topor, Constantin Aurelian Ionescu, Sorinel Căpuşneanu, Teodora Odett Breaz, and Sorina Geanina Stanescu. "Fintech accounting and Industry 4.0: future-proofing or threats to the accounting profession?" Journal of Business Economics and Management, 2022,21(3): 997-1015.
Huong, Hoang Dinh. "Managerial Accounting and Fintech in Listed Telecommunication Enterprises." Salud, Ciencia y Tecnología - Serie de Conferencias, 2024.
Orthaus, Selina, Christoph Pelger, and Christoph Kuhner. "The eternal debate over conservatism and prudence: A historical perspective on the conceptualization of asymmetry in financial accounting theory." Contemporary Accounting Research, 2023, 31(1): 41-88.
PwC. Financial services technology 2022 and beyond: Embracing disruption. PricewaterhouseCoopers. PricewaterhouseCoopers, 2022, https://www.pwc.com.
Roszkowska, Paulina. "Fintech in financial reporting and audit for fraud prevention and safeguarding equity investments." Journal of Accounting & Organizational Change, 2021, 24(4): 164-196.
Silva, A., AS. Ganz, and Roberto C. Klann. "Accounting conservatism in complex companies." SciELO Brasil, 2019, 16(3): 42-57.
Xia, Belle Selene, Elia Liitiäinen, and Ignace De Beelde. "Accounting conservatism, financial reporting and stock returns." Journal of Accounting and Management Information Systems, n.d., 54(2): 4-24.
Zakariya, Novie Andriani, Ahmad Khairul Hakim, Airlangga Bramayudha, and Moh. Ilham. "Risk management analysis using the enterprise risk management method with FinTech as the risk controller." proceedings.uinsa.ac.id, 2022, 13(6): 59-73.