Research On The Impact Of Financial Technology On The Profitability Of China’s Commercial Banks

With the continuous development of economic globalization,my country’s economic development has entered a new normal period of steady growth.Since 2016,the rapid development of domestic financial technology has become a driving force for the transformation,upgrading and modernization of the traditional financial industry.Commercial banks are the representatives of traditional finance and the new subject of financial technology development.The comprehensive transformation direction of commercial banks should focus on the development strategy of financial technology.In recent years,commercial banks have used artificial intelligence to continuously optimize financial products,use big data for product innovation,and use the Internet of Things,cloud-computing and other scientific and technological achievements in the improvement of business models and business processes.At present,the role of financial technology in enabling banks is no longer limited to the front-end link,but is based on data governance,and the deep integration of scientific and technological innovation achievements with the bank’s internal product design,business form and credit relationship,etc.,has a great impact on the profitability of commercial banks.This paper firstly sorts out the three major theories on the impact of financial technology on the profitability of commercial banks,including financial intermediary theory,financial function theory and financial innovation theory.Secondly,it fully explores the impact of financial technology on the profitability of commercial banks.Thirdly,using Python software to crawl the Baidu index of fintech keywords,and using the dimensionless method,entropy method and linear weighting method of data processing to calculate and integrate a set of fintech development indexes,which are used as the explanatory variables of this article.Through the empirical analysis of 39 commercial banks in China from 2011 to 2019,the following conclusions can be drawn:the development of financial technology,the cost-to-income ratio of commercial banks,the net interest margin,the ratio of deposits and loans,and the profitability of commercial banks have changed in opposite directions,indicating that the development of financial technology will weaken the profitability of commercial banks in my country;the regression coefficient of the proportion of non-interest income is positive,indicating that commercial banks can increase their profits by developing intermediary businesses and off-balance-sheet businesses that focus on non-interest income.The results of regression analysis on different types of commercial banks also show that the development of financial technology has the greatest impact on large commercial banks,followed by rural commercial banks,and relatively less impact on city commercial banks and joint-stock commercial banks.Finally,based on the conclusions and problems found in the theoretical and empirical analysis,specific suggestions are put forward for commercial banks to deal with the impact of financial technology development on their profitability:First,commercial banks can optimize customers’ digital experience and improve the intelligent platform.Expand their storage capacity;second,commercial banks can use financial technology to increase inter-business income;third,commercial banks can use big data customer analysis and risk management to improve loan quality;fourth,commercial banks of different scales can take differentiated measures fintech application model.There are two innovations in this paper: First,in the selection of empirical data,the time period for data selection is extended and the scope is appropriately expanded,which supplements the empirical basis for subsequent research.Second,this paper uses the entropy method and the linear weighting method to calculate and obtain a set of financial technology development indexes,which are used as proxy indicators to measure the development of financial technology.