The Impact Of The Capability Of Knowledge Management Performance Towards The Service Innovation Of Commercial Banks

China’s commercial banks,as the most important part of China’s financialindustry, are facing a huge test and challenge in this era of knowledge economy. Thecompetition between commercial banks are becoming increasingly fierce, as depositand lending interest requires them to reduce the cost and focus on the intermediaryfinancial services such as credit card and investment on international market. In themeantime, Commercial banks in China are experiencing the throes of reborn whennumbers of foreign banks come to China. Foreign banks do better in the system,technology, business and services, which make Chinese banks have to face the loss ofhigh-quality customers and talents, a series of problems such as loss of business andopportuniti8es. In order to survive in the fierce competition, China’s commercialbanks must be oriented to customer needs, make full use of modern technology toprovide diversified and personalized financial services. Therefore, by adoptingknowledge management, commercial banks should carry out all kinds of financialservices innovation activities. As a new management method, the knowledgemanagement requires a lot of customer participation. Knowledge managememt canhelp banks improve their intellectual system, as well as increase their intellectualcapital. Also, it is conducive to promoting the reform of commercial banks’ internalmanagement system for achieving product and service innovation. Meanwhile,knowledge management can help commercial banks integrate the variousorganizational resources effectively in order to improve their sensitivity to marketchanges.Therefore, this paper has certain theoretical value and practical value to theservice innovation of commercial banks, which discusses how the capabilities ofknowledge managemen impact the service innovation.This paper examines, based upon the past existing literatures, the influence tocommercial bank service innovation incurred by knowledge management ability, fromthe angle of management methods. It also proposes the integrated model of thecommercial bank service innovation, from both perspectives of knowledgemanagement creation capability and knowledge management process capability.Besides that, the paper presents a comprehensive analysis of the effect of knowledgemanagement capability exerting on the commercial bank service innovation from sixdifferent elements, including organization culture, organization infrastructure, information technology, knowledge acquirement, knowledge transformation, andknowledge application. Using statistical methods, the paper finds out that thecapabilities of knowledge management have positive effects on the service innovationof commercial banks. The knowledge infrastructure capability impacts on serviceinnovation through the knowledge process capability.Through establishing a learning organization culture, emphasizing the flatteningof the organizational structure, improving employee application of informationtechnology, an organization can speed up the absorption of knowledge, transformation,transmission and sharing, application and innovation. Thus, the commercial banks canimprve the overall performance of innovation of commercial banks in the serviceconcept, service product, service platform and service strategies. Therefore, thecommercial banks should put efforts in the implementation of knowledge management,and improving the knowledge management capabilities for their employees. I hopethis research have certain guiding significance on improving the for innovationperformance of commercial banking services through knowledge management.