The financial sector is undergoing a profound transformation driven by advancements in financial technology (FinTech). This study undertakes a comprehensive literature review to analyze the extent to which emerging technologies—such as artificial intelligence (AI), machine learning (ML), and big data analytics—are reshaping traditional banking and financial services. By examining key areas of disruption, including peer-to-peer lending, digital banking services, and mobile payment platforms, the research provides insights into the implications of FinTech innovations on legacy banking practices. Furthermore, the paper explores the strategic responses of traditional financial institutions, such as partnerships with FinTech firms and investments in digital transformation, alongside the critical regulatory challenges arising from these developments. The findings reveal a dual impact: FinTech has democratized access to financial services and enhanced operational efficiency, yet it has also introduced regulatory and cybersecurity complexities. The review concludes by emphasizing the importance of regulatory alignment, technological adaptation, and collaborative efforts for sustainable growth in the evolving financial ecosystem.