Research On The Impact Of Financial Technology Applications On Commercial Bank Loans And Risks

With the continuous progress of the economy and society,data has relatively become an independent factor of production.Meanwhile,the development of digital technology has met the needs of economic growth for infrastructure.In recent years,financial technology(Fin Tech),represented by big data,artificial intelligence,cloud computing,blockchain,has risen extensively,setting off an upsurge in the development of the Fintech industry at home and abroad.Fintech has brought "disruptive innovation" to the financial industry.With its high efficiency and low cost,it is gradually creating new development concepts,business models and financial needs,which have caused a certain impact on traditional financial institutions including commercial banks,squeezing the development space for major businesses of commercial banks such as payment,settlement,deposit,wealth management and credit financing.Of course,in addition to the shock,Fintech has also injected new momentum into the transformation and development of commercial banks,helping the latter to achieve changes in application scenarios,channel acquisition,risk control,and investment management.On the one hand,Fintech will bring major changes to the service concepts and thinking models of traditional commercial banks,thereby helping to enhance their financial service innovation capabilities.On the other hand,as the development of Fintech enters a new stage,it not only has achieved comprehensive innovation in key technologies that is no longer limited to Internet technology,but also has greatly improved the degree of integration of finance and technology.The application of a variety of the latest IT technologies has completely changed the original practices of traditional banks in customer information collection,risk pricing models and investment decision-making processes.When efficiency has been greatly improved,operating costs have also been drastically reduced.In particular,the alleviation of information asymmetry and the reduction of transaction costs by Fintech are also conducive to solving the difficult and expensive financing problem of SMEs(small and medium-sized enterprises),which has plagued our country for a long time.In this way,more long-tail groups are included in the scope of effective financial services,and new solutions are provided for solving financial exclusion and sustainable development of inclusive finance.To this day,embracing Fintech and transforming to "open banking" has become the consensus of the banking industry and the global financial industry.Recently,all major commercial banks in China have already started their Fintech strategy and layout,seeking strategic transformation since 2015 either by opening Fintech subsidiaries or by cooperating with Fintech companies.The development of Fintech is in the ascendant,and its large-scale application in the banking industry has become an undisputed trend in the future.From the current point of view,the digital transformation of banks has achieved some gratifying results,which are reflected in related infrastructure construction,professional talent training and the development and promotion of digital inclusive products.This also provides some conditions for the research on the Fintech application in the banking industry.Research on related issues is important to the healthy development of the Fintech industry and whether commercial banks can find truly significant signals in the challenges of Fintech,using it to reposition their own development models.This will help each market participant to clearly understand future development direction,providing guidance for the deeper and fuller digital transformation of commercial banks.At the same time,it will facilitate the banking regulatory authorities to reduce the possibility of the outbreak of systemic risks in Chinese banking industry timely and effectively,and promote the high-quality development of Chinese real economy practically and jointly.Judging from the existing literature,many studies have no unified conclusion in the impact of Fintech on commercial banks,whose key lies in whether the demonstration is carried out from the perspective of the bank's application of Fintech.Compared with the existing literature,this article will make innovations in some aspects.In terms of research perspectives,the existing literature mostly regards the development of Fintech as an external force that will shock the financial industry.This article will conduct research from the perspective of the integration of Fintech and commercial banks,which is based on the current situation of Fintech applications.Several parts come from the research results of some commercial banks and lending institutions in the past two years,which makes the overall perspective of this article more objective and comprehensive and having strong practical significance.In terms of theoretical research,this article will build several models including Fintech applications on the basis of previous studies,such as information game model,traditional banking structure model and common asset holding network model,in order to study the impact and mechanism of the development and application of Fintech on commercial banks' loan business,individual risk and systemic risk.In terms of indicator innovation,this article will use the external cooperation information of commercial banks and Python web crawler technology to design and construct two types of Fintech indicator that are detailed to individual banks,which is intended to conduct empirical analysis on the direct impact of Fintech on commercial banks at the individual level and are also useful explorations and attempts of related research methods.This research is divided into seven chapters.Chapter One is the introduction,which will give a detailed description of the research background,problem proposal and research objectives.Also,it will introduce the chapter structure,research methods and processes and the innovations of this thesis.Chapter Two is a literature review,combing the existing literature from three aspects: the relationship between technological progress and financial industry development,the rise and development of Fintech and the impact of Fintech on commercial banks.Chapter Three is the research of Fintech and commercial banking practice,which can be divided into two parts: Fintech application from the perspective of banks and digital inclusive practice of commercial banks.It will enumerate and analyze the investment,layout,application and effectiveness in the field of Fintech by Chinese commercial banks.Chapter Four is the research on the relationship between Fintech application and the credit structure of commercial banks.It will combine the information game model to explore the impact of applying Fintech on the credit structure changing and performance of commercial banks in China,so as to compare the changes brought by the application of Fintech to commercial banks,the development model of Fintech and the heterogeneity of banks.Chapter Five is the research on the relationship between Fintech application and individual risk of banks.It will combine the traditional banking structure model to examine the heterogeneous impact of applying Fintech on the individual risk of different types of commercial banks,and will prove the existence of crowding out effect on banking market theoretically and empirically.Chapter Six is the study of the relationship between Fintech application and systemic risks in the banking industry.It will combine the banking network model,explaining and proving the co-lending mechanism to further demonstrate the impact on systemic risk exists in the banking industry due to the difference in the application of Fintech by commercial banks.The Chapter Seven is conclusions and recommendations.The main conclusions of this thesis are as follows:Firstly,in terms of bank credit structure,the use of Fintech by commercial banks is conducive to improving banks' ability to process soft information,improving information accuracy,and alleviating the problem of information asymmetry between banks and borrowers,thereby bringing more long-tail customers into services.In particular,it will help banks to increase the scale and proportion of credit loans and retail loan business,and promote the adjustment of the credit structure and customer structure of bank loans.At the same time,the heterogeneity results show that the development of Fintech through foreign cooperation has similar effects on the personal loan business of national banks and regional banks,which will help them increase the scale and proportion of personal loan business;from the perspective of the adjustment of loan credit structure,the impact of the use of Fintech on regional small and medium banks is significant,and the impact on national banks is not significant.To a certain extent,the development of Fintech through external cooperation is more effective for regional small and medium-sized banks.Finally,the higher risk premium for long-tail customers improves the profitability of commercial banks and makes their business sinking more proactive.This will further promote the expansion of bank retail business.Secondly,in terms of individual bank risks,Fintech application has reduced the information asymmetry between banks and enterprises,thereby significantly reducing the risk level of commercial banks and improving their risk tolerance.However,the differences in the application methods,scale of banks,management modes and organizational structures will also affect the effectiveness of the use of Fintech.This research shows that,compared with large banks,small and medium-sized banks have weaker risk improvement capabilities.At the same time,the use of Fintech by large banks will stimulate the increase in risk levels of small and medium-sized banks.In terms of market structure,applying Fintech has narrowed the gap in the ability to obtain soft information between large banks and small and medium-sized banks.In this way,large banks have been able to sink their businesses and compete with small and medium-sized banks in areas such as small and micro credit.With the advantage of capital cost,large banks will be more likely to attract relatively low-risk small and micro customers in providing loans,and may therefore form a "dimension reduction blow" to small and medium banks in the inclusive field,which will have a negative impact on the latter.This research shows that after applying Fintech,large banks' loans to SMEs have increased significantly,but the risks have not changed significantly.In contrast,the growth of loans to SMEs by small and medium banks is not obvious,but the risks have increased significantly.This result reflects the loss of high-quality customers of small and medium-sized banks and the existence of market crowding-out effects.Thirdly,in terms of banking systemic risk,in addition to pure market crowding out effect,the reduction in identification difficulty brought by Fintech application will also lead to the intensification of the phenomenon of co-lending for leading SMEs by commercial banks,thus making the degree of correlation between banks increase with the increase in common asset holdings.Co-loan is likely to bring about a series of problems such as excessive credit extension and special fund misappropriation of enterprises.In addition,SMEs have relatively weak anti-risk capabilities,so the overall systemic risk level of the banking industry is likely to increase accordingly.This research shows that the increasing difference in Fintech application among banks will increase the systemic risk of the banking industry.At the same time,the expansion of the difference in Fintech application will increase inter-bank co-loans,and the intensification of inter-bank co-loans will increase the systemic risk of banking industry.In response to the research findings,this article proposes: Firstly,commercial banks should vigorously develop Fintech to establish user thinking and focus on user experience;strengthen technology-driven and tap data value;promote open cooperation and broaden application scenarios to truly realize digital transformation.Secondly,commercial banks should seize the opportunities of China's inclusive finance development,make changes in the optimization of outlets,product and service innovation,and risk management control,and make full use of Fintech to achieve business sinking.Finally,small and medium-sized banks should recognize their market positioning,highlighting its own characteristics and regional characteristics,and provides differentiated products and financial services,forming a dislocation competition with major banks.At the same time,government departments should formulate differentiated regulatory policies to guide healthy competition in the credit market and create a sound market competition pattern.