Perception is Everything : Risk Salience and FinTech Demand

We examine the importance of perceived data security risk for FinTech use in the US residential mortgage market. We find areas that experience a local data breach reduce FinTech refinancing application volume by 1.4%. These effects are short-lived and larger when the breach involves technology and is reported in news media, consistent with a temporary shock to the salience of data security threats. Additional analyses using geographic exposure to the 2013 Target data breach confirm the baseline results. Overall, the findings suggest that the salience of data security risk is an important driver of FinTech demand, and that breaches have negative spillover effects on FinTech service providers