The Impact Of Fintech On The Efficiency Of Commercial Banks

With the rapid development of technology,finance and technology continue to integrate.In recent years,fintech has gained momentum in China.According to KPMG,by the end of 2021,the amount of investment in China’s fintech sector has increased from US$110 million in 2013 to US$2.63 billion.The development of fintech brings opportunities as well as challenges to commercial banks.Many scholars at home and abroad have shown that fintech can significantly affect the efficiency of commercial banks,however,due to differences in research samples,time span and other factors,no unified view has been formed.Based on this background,this paper explores the impact of fintech on bank efficiency by taking commercial banks in China as the research target,and makes recommendations to commercial banks and regulators based on the research results.In the theoretical part,based on the long tail theory,financial disintermediation theory,economies of scale theory and information asymmetry theory,this paper analyses the impact of fintech on bank efficiency,demonstrating the mediating mechanism of business diversification and risk-taking capacity in fintech affecting bank efficiency,the moderating mechanism of banking boom and financial regulation in fintech affecting bank efficiency,and the heterogeneity analysis based on the nature of banks.In the empirical test section,this paper uses the annual data of 51 commercial banks in China from 2011 to 2021 as the research sample,measures the fintech index using the entropy method,and applies the super-efficient SBM-Malmquist model to measure the efficiency of commercial banks.On this basis,this paper was empirically validated through multiple regression analysis controlling for individual effects,mediating effect test,moderating effect test and group regression analysis.The study shows that,firstly,fintech will significantly improve commercial bank efficiency.Secondly,business diversification and risk-taking capacity play a part in mediating the relationship between fintech and bank efficiency,and fintech will ultimately improve the efficiency of commercial banks through the two paths of promoting business diversification and enhancing the risk-taking capacity of commercial banks.Thirdly,the improvement of the banking industry’s prosperity and the strengthening of financial regulation all reinforced the role of fintech in improving bank efficiency.Fourthly,the impact of fintech on the efficiency of banks differs significantly by nature,with the most significant impact on the efficiency of joint-stock banks,followed by city commercial banks,and then state-owned banks,but not on the efficiency of rural commercial bank.Based on the above conclusions,this paper puts forward the following recommendations.Commercial banks should optimise the layout of fintech and increase R&D efforts;recruit fintech talents and focus on talent training;Strengthen product innovation and promote business diversification;enhance risk management and improve risk-taking capacity;and clarify their own positioning to achieve differentiated.The regulatory authorities should step up financial supervision and strengthen international cooperation and exchange to learn from the regulatory thinking of other countries in order to achieve synergistic development of fintech and commercial banks.