Research On The Impact Of Fintech On The Profitability Of Commercial Banks

Financial technology(Fintech)mainly refers to the innovation of products and services provided by traditional financial institutions such as banks by using advanced technological means(such as cloud computing,big data,blockchain,etc.),which helps to improve financial inclusion and resilience and further enable high-quality development of the real economy,and plays an indispensable role in supporting and serving the real economy..in January 2022,the People’s Bank of China issued the "Financial Technology Development Plan(2022-2025)",which sets out new requirements for banks and other traditional financial institutions put forward new requirements and clarified the main responsibility of banks in strengthening the top-level design of fintech in the future.Therefore,analyzing the business development and profitability of banks in the context of Fin Tech in China provides a direction for banks to improve their market competitiveness and develop Fin Tech application strategies in the future.Fintech is at a stage of highly integrated development of finance and technology in China,with the rapid development of emerging fintech institutions,commercial banks are facing huge challenges in their business management,while also ushering in new opportunities.On the one hand,fintech companies have to a certain extent impacted the monopoly position of commercial banks in the traditional financial market and weakened their financial intermediary function;on the other hand,the vigorous development of fintech is conducive to forcing commercial banks to innovate themselves and promote their transformation to digitalization and intelligence.In the long run,as commercial banks invest in and apply financial technology,their resource allocation efficiency and risk management level will be significantly improved,and their operating costs will be reduced,thus enhancing their profitability.This paper firstly explains the background and significance of the study,composes the literature on the impact of financial technology on commercial banks at home and abroad,defines the concepts related to financial technology and commercial banks’ profitability,then analyzes the current situation of commercial banks’ financial technology application and profitability,and then elaborates the impact mechanism of the development and application of financial technology on commercial banks’ profitability.This paper takes 47 commercial banks in China from 2011 to 2020 as research samples to explore the impact of fintech on the profitability of different types of commercial banks in China.The empirical results show that(1)the development of fintech intensifies the competition in the financial market and negatively affects the profitability of commercial banks;(2)fintech is significantly and negatively related to indicators such as net interest margin and net interest income share of commercial banks;and(3)fintech has heterogeneous effects on four different types of commercial banks,namely state-owned banks,joint-stock banks,urban commercial banks and agricultural commercial banks.The study conducts robustness tests by replacing the dependent variable,instrumental variable method and double difference estimation method.Finally,this paper puts forward relevant suggestions in terms of commercial banks should strengthen investment in financial technology,develop business markets,strengthen cooperation with financial technology enterprises and optimize customer experience to promote the steady and orderly development and transformation of commercial banks in China in the direction of digitalization and intelligence.