The Research On The Impact Of Financial Technology On The Cost Efficiency Of Commercial Banks

In recent years,fintech developed rapidly,and People’s Bank of China clearly pointed out in the "FinTech Development Plan(2019-2021)" that fintech is an important driving force for promoting financial development and improving quality and efficiency.In the current context of the rapid development of financial technology,it is of great significance to the business development of commercial banks whether they are able to give full play to its positive impact on their own.This paper selects data from 290 commercial banks,including state-controlled large commercial banks,joint-stock commercial banks,urban commercial banks and rural commercial banks,and uses a stochastic frontier model(SFA)approach to construct a transcendental logit function to measure the cost efficiency of each commercial bank over the ten-year period 2011-2020.For the FinTech development index,the China Digital Inclusive Finance Index compiled by the Digital Finance Research Centre of Peking University at the prefecture and city levels was used to represent the financial development index.The intrinsic impact between the two was measured by constructing a fixed-effects model to link them,thus pointing out the impact of fintech development on the cost efficiency of commercial banks.At the same time,this paper examines whether there are differences in the degree of impact of fintech on the cost efficiency of different commercial banks and the channels through which fintech can enhance the cost efficiency of banks,and clarifies the degree of impact of fintech on the cost efficiency of different banks through heterogeneity analysis and examines the paths through which fintech development affects the cost efficiency of commercial banks through the mediation mechanism.The study finds that the development of fintech has a significant positive impact on the cost efficiency of commercial banks,and can enhance the cost efficiency of commercial banks,thus bringing a positive effect on banks.Heterogeneity analysis shows that there are differences in the degree of impact of fintech development on the cost efficiency of commercial banks of different nature,with the cost efficiency enhancement effect of fintech on large commercial banks and joint-stock commercial banks being significantly smaller than that on urban commercial banks and rural commercial banks.The analysis of the intermediary mechanism shows that the development of fintech can improve the cost efficiency of commercial banks through the channel of increasing available capital and reducing funding costs;but not through the channel of reducing fixed asset investment,but through the channel of increasing fixed asset investment.Combined with the research findings,this paper puts forward the following policy recommendations:(1)Commercial banks should correctly understand the role of financial technology in their own enhancement and make solutions that are most beneficial to their own development according to their own nature.State-controlled large commercial banks and joint-stock commercial banks should rely on their own strengths,make full use of the achievements of financial technology to broaden access to funds,get rid of their reliance on manual labour,optimize their cost structure and enhance their competitiveness.Urban commercial banks and rural commercial banks should focus on the areas of inclusive finance and small and micro finance that fintech enterprises are concerned about,concentrate their main customers and business sources on small and medium-sized,private enterprises and emerging technology enterprises,seize the opportunity of the rapid development of fintech and the change of the interest rate market,complete the transformation of the bank,and effectively play the role of fintech in improving their own cost efficiency.(2)Commercial banks should pay attention to the role of financial technology in influencing available funds,rationalize their own funding activities,make full use of the development of financial technology to make commercial banks’ liability business online,so as to promote the growth of commercial banks’ liability business and improve the coverage of liability business,and also actively expand the channels for obtaining deposit-type liabilities,absorb residents’ idle funds by virtue of convenient technology,and actively explore new The bank should also actively explore new sources of funding.Relying on convenient technology to absorb residents’ idle funds will improve banks’asset and liability management and reduce unnecessary costs and expenses in the funding process.At the same time,commercial banks should complete the upgrading of fixed assets and equipment,get rid of the reliance on manual labour and thus reduce labour costs.They should pay attention to the efficiency enhancement and cost reduction effect after the increase of fixed inputs,and effectively optimize their cost structure,thus bringing about cost efficiency enhancement and competitiveness strengthening.(3)Government departments should deepen the structural reform of the financial supply side,establish a "risk-based" prudential regulatory framework,consider the relationship between financial development and stability and security,and firmly resolve to prevent systemic risks.A data platform for financial supervision.Establish a risk analysis and early warning system to detect and deal with financial risks at an early stage,and enhance the foresight and comprehensiveness of risk monitoring.