The Impact Of Digital Transformation Of Commercial Banks On Their Profitability

The rise and development of big data,cloud computing,artificial intelligence and other technologies have brought development opportunities to the traditional financial industry,prompting commercial banks to continuously promote the process of digital transformation and expand their own development space.The financial products,service models and business structure of commercial banks have changed,and the service experience of customers has been continuously improved.However,does this digital transformation really improve the profitability of commercial banks?This paper summarizes a circular mechanism(DNA cycle),two development stages(bringing in,going out)and three transformation directions(cognitive transformation,organizational transformation and product transformation)of commercial banks’ digital transformation,and builds a theoretical framework for analyzing the impact of commercial banks’ digital transformation on their profitability.On this basis,this paper selects the panel data of 246 Chinese commercial banks for 11 years from 2010 to 2021,integrates digital transformation,market share,credit risk and profitability into the same analytical framework,and uses the systematic GMM estimation method to study the impact of commercial banks’digital transformation on their profitability and identifies the influence mechanism.The results show that digital transformation has a significant positive U-shaped impact on the profitability of commercial banks,and this impact will affect the profitability of commercial banks through the transmission of market share and credit risk.Further research shows that there are heterogeneity of asset scale,business model and credit structure in the process of commercial banks’ digital transformation affecting their profitability.Based on the above research conclusions,this paper holds that commercial banks need to speed up the process of digital transformation,further improve their digital level,improve customer acquisition and customer engagement ability through digital transformation,expand the scale of customers and business,and thus improve profitability.While promoting the digital transformation,it is necessary to steadily increase the asset scale and the proportion of intermediate business of banks,continuously strengthen the ability of risk control,steadily improve the issuance of credit loans,and improve the profitability through digital innovation.