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

Under the background of the strong development momentum of Fintech,traditional commercial Banks have realized that the combination of Fintech to accelerate the pace of transformation has become an irreversible trend,and some Banks have increased their investment and made transformation attempts.Understanding the influence mechanism of Fintech on commercial Banks,the development stage and output level of increasing investment in Fintech,and how to improve profitability in the background of Fintech play a crucial role in the successful transformation,stable dominant position and sustainable development of commercial Banks.Firstly,this paper clarifies the concepts related to Internet Finance and Fintech,and studies the development history of domestic Fintech and the performance of commercial Banks' profitability under the background of Fintech.Then,analyzes the influence mechanism of Fintech on the profitability of commercial Banks.Next,combining with the development status of Fintech,analyzes the influence from the competition,technical support and application aspects,the holistic effect on the profitability of commercial Banks depends on which side effect is more obvious between the negative effects of industry competition and the positive effect of technical support and application,the overall effect will change with the development of Fintech.After that,using 16 listed Banks which is divided into three sets of joint-stock commercial bank,city commercial bank and nationalized bank,and using a total of 31 quarterly data from 2011Q1 to 2018Q3 to build panel data model,select ROA as the explained variable to represent profitability,using principal component analysis to build the Fintech index on behalf of the financial development level of Fintech,The empirical results show that the indicator has a negative effect on ROA,indicating that the development of Fintech brings obvious competition impact to commercial Banks.This also confirms that Fintech is still in the initial stage of development at present.Due to immature technology,the actual application is in the period of investment and shallow transition,and the output effect is not obvious.Therefore,it fails to contribute enough profit growth to promote the improvement of commercial Banks' profitability.However,with the subsequent development of Fintech,commercial Banks' deepening application of Fintech will release the growth point of profit by reducing the cost of operation and management and digging out new revenue sources.Finally,the paper gives some suggestions on how to improve the profitability of commercial Banks under the background of Fintech.