Analysis Of The Influence And Mechanism Of Fintech On The Profitability Of Multinational Banks

Fin Tech has been developing rapidly around the world in recent years,and although China’s Fin Tech is not the earliest,it is the most rapidly developing.The rapidly developing Fin Tech industry is like a double-edged sword,bringing fresh development opportunities to the traditional banking industry,and to some extent,putting its development to a severe test.With the continuous development of economic globalization,more and more domestic banks have launched international operations,and more and more foreign banks have entered China.These multinational banks were the first to come into contact with Fin Tech and have more quickly recognized the huge opportunities that Fin Tech brings,and have increased their investments in Fin Tech,taking the lead among many commercial banks.The introduction of Fin Tech and the implementation of digital transformation has become a mutually recognized choice of traditional commercial banks.Fin Tech has already had a significant impact on many aspects of the traditional banking industry,such as products and customer service,sales channels,IT systems and business processes,which,in turn,will gradually be reflected in the profitability of banks.This paper focuses on the opportunities and challenges brought by the development of Fin Tech to the operation of multinational commercial banks,and provides an in-depth analysis of its potential impact on the profitability of multinational commercial banks.Based on the panel data of multinational banks of different nature from 2013 to 2020,we use factor analysis to synthesize the Fin Tech index,construct a dynamic panel model to quantitatively analyze the overall impact of Fin Tech development on the profitability of multinational commercial banks and the differential impact on Chinese and foreign banks,and empirically test the transmission mechanism of its impact through a multiple mediating effects model.The following conclusions are finally drawn:(1)On the one hand,Fin Tech has technology spillover effects that help commercial banks accurately identify customer needs,reduce information asymmetry,strengthen risk identification,broaden customer acquisition channels and product innovation to increase revenue sources,reduce costs by replacing manual labor with high technology,and enhance profitability.On the other hand,Fin Tech brings a competitive effect.The emergence of Fin Tech and Internet companies has intensified the competition between banks and peers and non-bank financial institutions,causing impact on banks’ asset and liability business and intermediate business,increasing banks’ customer acquisition costs,reducing banking revenue and worsening profitability.(2)The Fin Tech industry is developing well,and in order to regulate the healthy development of the industry,the state has issued a series of policies one after another to continuously strengthen regulation.Commercial banks have embraced Fin Tech,strengthened cooperation with Fin Tech companies,established Fin Tech subsidiaries,and continuously innovated the application and service models of Fin Tech.(3)Compared with the technology spillover effect,the competitive effect brought by the development of Fin Tech is more obvious.Among them,compared with foreign banks,Chinese banks are more significantly affected by the impact effect of Fin Tech.Specifically,there are three main transmission channels through which Fin Tech deteriorates the profitability of multinational commercial banks: Fin Tech increases the cost-to-income ratio of multinational banks and intensifies the pressure of asset and liability management of multinational commercial banks;Fin Tech raises the non-performing loan ratio of multinational banks and increases the risk-taking level of multinational commercial banks;Fin Tech reduces the net interest margin of banks and reduces the income of multinational commercial banks by increasing the cost of customer acquisition The study also finds that Fintech reduce the net interest margin of banks and decrease their income by increasing customer acquisition costs and reducing revenue.In response to the above research findings,this paper puts forward the following recommendations for commercial banks to apply Fin Tech:(1)strengthen the complementary advantages with Fin Tech companies,jointly enhance the value of each other’s platforms,cooperate in developing products and services,and obtain a double enhancement of brand value.(2)Strengthen the R&D and application of Fin Tech,increase innovation and give full play to the Fin Tech technology spillover effect.(3)Cultivate and construct a system of financial technology professionals,open up channels and recruit talents to improve the level of financial technology utilization.