Sustainable innovation in the financial and banking industry depends on establishing transparent and efficient regulatory frameworks that align with rapid technological developments. The rapid expansion of financial technologies (FinTech) in digital payments, open banking, and online financial services presents both opportunities for efficiency and challenges in regulation, compliance, and risk management. In this evolving environment, regulatory technology (RegTech) and supervisory technology (SupTech) act as vital enablers, bridging the gap between innovation and institutional oversight. This study aims to develop an empirical model to identify and prioritize the factors influencing the use of FinTech in the Iranian banking system, emphasizing the role of RegTech and SupTech. The research is applied–developmental in purpose and descriptive–analytical in method. The statistical population includes branch managers of Bank Saderat in East Azerbaijan Province and experts in banking and financial technology. Data were collected through a structured questionnaire and analyzed using partial least squares structural equation modeling (PLS‑SEM) in SmartPLS software.
The results reveal five main factors influencing banks’ use of FinTech: regulatory creation and compliance, efficiency enhancement, innovation, competition, and transparency improvement. Among these, regulatory creation and compliance exert the strongest effect, underscoring the institutional determinants of FinTech adoption in the Iranian banking context. The study concludes that FinTech application in banks is primarily driven by regulatory and institutional forces rather than purely technological motives and provides practical implications for policymakers to design controlled regulatory frameworks that sustain innovation.