Building a Financial Technology Index and its Impact on Banking Desertification: Iraq as a Case Study

This study examines the impact of the Financial Technology Index (FinTech Index) on the desertification of banking services in Iraq during the period 2017–2025. The research measures how the collective development of financial technologies influences access to banking services rather than analyzing individual technological indicators separately. The FinTech Index was constructed using factor analysis based on key digital indicators, including digital wallets, automated teller machines (ATMs), payment cards, and point-of-sale (POS) terminals. Bank desertification was used as the dependent variable representing changes in banking service accessibility. Annual time-series data were analyzed using the Kaiser–Meyer–Olkin and Bartlett tests, principal component analysis, and linear regression techniques. The empirical findings reveal a statistically significant inverse relationship between the FinTech Index and bank desertification, indicating that the expansion of modern financial technologies helps mitigate the decline in banking services through alternative digital access channels. The results suggest that technological transformation reshapes financial access mechanisms while supporting a hybrid banking structure in Iraq and sustainable financial inclusion.