Research on the Mechanism of Financial Technology's Impact on the Efficiency of Commercial Banks

Research on the Mechanism of Financial Technology's Impact on the Efficiency of Commercial Banks

Fan Yuqi（樊禹奇）

Canvard College,Beijing Technology and Business University

Abstract: At present, financial technologies such as big data, cloud computing, blockchain, and artificial intelligence are developing rapidly, providing support for urban commercial banks to strengthen their innovation path and improve their risk resistance capabilities. This article explores the mechanism by which fintech affects the efficiency of commercial banks.

Key words: Efficiency impact mechanism of fintech banks

1.Overview of the Development of Financial Technology

Although fintech started relatively late in China, its development speed is rapid. Its essence is the combination of finance and technology. But it is not simply a combination, but rather the addition of some technological means to better innovate and develop the traditional financial industry, improve efficiency, and effectively reduce operating costs. It is mainly pided into artificial intelligence, big data, Internet technology, blockchain and cloud computing in distributed technology. The emergence of financial technology has overturned traditional financial models, and the financial industry is bound to usher in a new wave of enthusiasm with the development of technology. Cloud computing and big data can be used for financial regulation, and the development of blockchain technology for decentralized storage can improve the security of investment information. The rapid development of digital currency has squeezed out traditional paper currency and dealt a blow to the banking industry. Currently, traditional banks must innovate their products and services.

2.Why do commercial banks need to develop fintech

With the launch of the Science and Technology Innovation Board, China's financial market is constantly improving, and there are more and more financing channels for enterprises. At this time, commercial banks should seize the opportunity of financial technology development. Since commercial banks have been mainly relying on the development of traditional businesses, the rapid development of Internet finance has put great pressure on the traditional businesses of commercial banks. Therefore, commercial banks should seek their own business transformation and rapidly develop financial technology. Due to strong support from the government, technology enterprises have developed rapidly, but financing needs are a common problem faced by these enterprises, and they focus on the convenience of financing. On the basis of developing financial technology, commercial banks can simplify the financing procedures for these high-tech enterprises, attract more enterprises to seek financing from commercial banks, and expand their financing business scale.

3.The impact mechanism of financial technology on bank efficiency

Modern banks have derived many other products and services on the basis of traditional deposits, loans, and payments, such as payment, wealth management, credit card installment, consumer credit, etc. The development of financial technology has expanded the channels for banks to serve customers and accelerated the innovation of products and services. In terms of expanding channels, fintech has enabled banking services to migrate from offline to online, and online to mobile. Taking the online personal users of Agricultural Bank of China as an example, the number of users has maintained rapid growth from 2015 to 2019, especially the annual growth rate of mobile banking users has remained above 20%. The annual reports of the four major banks show that the proportion of online transactions has exceeded 95%. During the fight against the COVID-19 in early 2020, physical outlets were closed, but daily financial activities such as online donation, transfer and consumption were not significantly affected. In terms of service innovation, taking payment as an example, cardless and fast payment can be completed through third-party payment or bank banking apps, meeting the needs of online and offline shopping, payment, and transfer. Scan codes, cross bank, password free, and facial recognition (fingerprint), making the user experience extremely convenient. Fintech also utilizes technologies such as big data, artificial intelligence, and cloud computing, greatly enriching the product supply of commercial banks. Big data technology enables banks to use comprehensive rather than sampled, multi-dimensional rather than singular, real-time rather than historical data for analysis, accurately positioning customer needs, and accurately measuring customer risks. With data, models, and computing power, commercial banks can utilize artificial intelligence to provide customers with products and services based on specific scenarios, achieving "private customization". The development of financial technology has increased the number of bank accounts. Due to the fact that online services are not limited by space and the marginal cost of adding new customers is almost zero, customers in remote areas or with low demand can enjoy banking services. The second is a decrease in transaction costs, including significant reductions in various transaction expenses such as branch staff salaries, venue expenses, and customer "leather shoe costs.

References

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