Empirical Study On The Impact Of Financial Technology On The Profitability Of Commercial Banks

In recent years,with the development and application of advanced technologies such as artificial intelligence,big data,and blockchain and the need of finance,the rhythm of the combination of technology and finance has accelerated.And the rapid development of financial technology brings commercial banks with transformation opportunities,while it also has big impacts on commercial banks.And China's commercial banks are currently facing pressures such as interest rate liberalization,financial disintermediation and increased competition in the domestic and international financial industry,as well as the rigidity of the profit model.Under such circumstances,China's commercial banks have begun to adapt to the trend of financial technology development,such as through the way of independence and cooperation to actively carry out research and application of financial technology to enhance their competitiveness and profitability.Therefore,it is of great significance to study the impact of financial technology on the profitability of commercial banks.This paper uses the combination of theory and empirical method to study the impact mechanism of financial technology on the profitability of commercial banks with the data of 13 commercial banks in China from 2005 to 2017,combining problems of the financial technology affecting the profitability of commercial banks.This paper proposes suggestions to improve the profitability of commercial banks in the context of financial technology.This has certain reference value for improving the profitability and competitiveness of China's commercial banks and promoting their sustainable and stable development.The main conclusions of this paper include three points:(1)The impact of financial technology on the profitability of commercial banks is the nonlinear effect of the “U” shape.In the early stage,financial technology companies have adversely affected commercial banks in payment,financing and wealth management,and commercial banks themselves have just been exposed to financial technology.So,they are not good at using financial technology in business and service innovation.Therefore,the negative impact of financial technology on commercial bank profitability is greater than the positive impact.With the development of financial technology,commercial banks have made certain achievements in the research and use of financial technology,and commercial banks have begun to cooperate with financial technology companies to complement each other.At this stage,financialtechnology is positive for the profitability of commercial banks.The effect is greater than its negative effect.Therefore,financial technology has a non-linear effect on the profitability of commercial banks in the “U” shape.(2)The impact of financial technology on different types of commercial banks is different.The impact of financial technology on large state-owned banks is less than its impact on joint-stock banks.This is because large state-owned banks have stronger strengths and face the impact of financial technology to make them more capable of coping with them.The adverse consequences are small;but with the continuous development of financial technology,due to the higher profitability of large state-owned banks,coupled with greater infrastructure,investment and application,financial technology has great profitability for large state-owned banks.The improvement effect is greater than the effect on the joint-stock banks.(3)Combining with the problems and empirical conclusions of the development of financial technology in China's commercial banks,this paper puts forward four suggestions and countermeasures to improve the profitability of China's commercial banks under the background of financial science and technology,which is to strengthen external cooperative learning,accelerate the development and application of financial technology,build a financial science and technology talent system and improve the risk prevention and control system.The innovation of this paper lies mainly in the empirical aspects: First,this paper proves the impact of financial technology on the profitability of commercial banks through empirical analysis.In the past,scholars mainly explained the impact of financial technology on commercial banks from a theoretical level.They did not specifically address the profitability of commercial banks,nor did they prove the relationship between them through empirical analysis.The empirical analysis mainly proves the impact of financial technology on the risk exposure of commercial banks.Second,when selecting samples,this paper selects 13 representative commercial banks in China that have begun to develop and use financial technology,rather than all commercial banks in China.Because only these commercial banks that have developed and applied financial technology can more accurately analyze whether financial technology has an impact on its profitability,the conclusion is more persuasive,otherwise it may weaken the influence of financial technology.