Abstract
The COVID-19 epidemic has accelerated the digital economy’s pervasiveness throughout the Chinese economy, leading to a sharp rise in demand for “contactless” services in the financial industry. We examine the digital transformation of the Chinese banking industry using the DEA–Malmquist index method, supplemented by a distance function and time to compare the dynamic changes of productivity. Our paper then conducts an empirical study on the digital transformation of Chinese commercial banks based on their improvements in efficiency. We analyze banks with superior efficiency in science and technology investment and evaluate their digital maturity and digital transformation experience. Results show that digitalization investment has contributed to substantial production efficiency improvement for commercial banks; however, heterogeneity exists across banks. We further advocate a path for banks’ digital transformation based on theoretical research and empirical digital transformation experience in this area.
Highlights
In recent decades, commercial banks in China have invested heavily in science and technology
It is expected that investment in science and technology improved the productivity of commercial banks directly; further, we hypothesize that our Data Envelopment Analysis (DEA) and cluster analysis will reveal that fintech and digitalization indirectly enhance the overall technology contribution on total factor productivity (TFP) and other productivity indexes as a whole
Based on the historical bank data, the Malmquist index represents the change in total factor productivity and dynamically measures the continuous evolution of financial technology investment efficiency
Summary
Commercial banks in China have invested heavily in science and technology. Investment in fintech includes bank’s payment and clearing systems, e-money, online lending, big data, blockchain, cloud computing, artificial intelligence, intelligent investment consultant, intelligent contract and other fields Large investments in these arenas are transforming core banking, insurance and payment processes, and total production efficiency. This paper starts from enterprise-level research on the theory of financial-technology investment and analyzes the digital transformation strategies of commercial banks. The structure of this paper is as follows: the first section describes research background and literature review; the second section introduces the construction of the theoretical model; the third section discusses the data sources and indicators; the fourth section measures the financial technology efficiency of commercial banks under the benchmark parameters and makes an empirical analysis; the fifth section summarizes the full text and gives suggestions on the path of digital transformation
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