Research On The Influence Of Fintech On The Profitability Of Retail Business Of Commercial Banks

In recent years,with the rapid development of science and technology,many industries have begun to cooperate with science and technology enterprises.The application of financial technology in traditional financial industry is an important development direction in the future.By applying advanced science and technology,the financial industry can reduce the operating costs of retail business,optimize customer experience and help its digital transformation.However,in the early stage of the rise of financial technology,the operation of commercial banks will also be affected by the emergence of new technologies.The retail financial products of Fintech enterprises have high deposit interest rates and a wide audience,such as Alipay,We Chat payment and Yu’e Bao,which have attracted a large number of traditional bank retail business customers.In this context,China’s traditional commercial banks are facing both opportunities and challenges.The retail business of commercial banks is the most affected because it is an important part of commercial banks’ profit business.Therefore,studying the impact of financial technology on the profitability of retail business of commercial banks can better help the construction of commercial banks.This paper is found on the theoretical analysis of the influence of fintech on the profitability of commercial banks’ retail business,empirically analyzes the influence of fintech on the profitability of commercial banks’ retail business by taking the data of 16 Chinese listed commercial banks from 2012 to 2021 as research samples,and establishes a fintech index by using the Peking University Inclusive Finance Index.The empirical results show that.(1)The profitability of the retail business of commercial banks is negatively inhibited in the initial stage and positively promoted in the later stage,showing a U-shaped feature of first decreasing and then increasing.In the early stage of fintech,a large number of fintech enterprises emerged in full flow,aiming at a highly overlapping user group with that of retail business of commercial banks,which will inevitably lead to the diversion of retail customers of banks.Application of fintech requires large consumption in the early stage,and the effect of the application of fintech will not appear in the short term.Therefore,early application of financial technology,the impact on the profit of retail business of commercial banks is negative.With the continuous transformation and development of commercial banks,commercial banks and fintech have opened a win-win situation of cooperation.In addition,the initial investment of financial technology by commercial banks begins to play a role.The labor cost saved by the application of financial technology can be higher than the research and development cost to a certain extent.Therefore,in the long run,financial technology has a positive promoting effect on the profitability of retail business of commercial banks.(2)The influence of fintech on the profitability of retail business of different types of commercial banks shows a U-shaped feature of first decreasing and then increasing,but the influence on different types of banks is different and heterogeneous.The negative infiuence of fintech on large government commercial banks and joint-stock banks in the early stage is obviously less than that of city commercial banks,which is because large commercial banks have more large customers and have larger scale and stronger competitiveness.However,city commercial banks are mainly retail customers with smaller capital scale and need to invest a large amount of capital and human capital in the early stage.City commercial banks will be powerless.In the long run,joint-stock banks make the most profits from the retail business of commercial banks brought by fintech,while state-owned commercial banks rank last.Joint-stock banks face great competitive pressure,always pay attention to market dynamics and have flexible system,which can better apply fintech to their own banks.Retail accounts for a high proportion of urban commercial banks’ customers.Long-term application of fintech can offset the large amount of investment in the early stage and improve their profitability relatively well.Due to the huge organizational system,complex personnel structure and low attention to retail customers,state-owned commercial banks ignore the application of fintech to improve the profitability of retail business.On the basis of empirical conclusions,this paper puts forward conforming countermeasures and advices:formulate fintech development strategies in line with its own;pay attention to fintech talent reserve;strengthen the application of fintech;improve the regulatory system and construct the intelligent risk control system.