The Impact of Financial Technology on the Operational Efficiency of Traditional Commercial Banks

Chen Zhao

doi:10.54691/bcpbm.v15i.289

Abstract

This paper uses the annual report data of 16 traditional commercial banks from 2015 to 2019, uses DEA-Malmquist index method, selects fixed assets, number of employees and operating expenses as input variables, and selects net profit and deposit loan ratio as output variables to do an empirical research on the impact of financial technology on the operating efficiency of traditional commercial banks. The results show that: commercial banks generally adapt to the changes in the financial market brought by the rapid development of financial technology, and use financial technology to improve their operational efficiency; the operational efficiency of 16 commercial banks increased in last five years, but there are differences among them. Generally speaking, the performance of local banks is better than that of joint-stock banks, and the performance of joint-stock banks is better than that of state-owned commercial banks. The average operating efficiency of commercial banks in the past five years is relatively low, mainly due to the low efficiency of science and technology application and the slow efficiency of science and technology renewal. Based on the above empirical findings, this paper makes important recommendations for bank growth, policy support, and personnel training in the context of rapid financial technology development. This paper may provide some insight into China's banking industry's efficient growth.

Highlights

Financial technology generally refers to new business models, new technology applications and new product services driven by emerging technologies such as big data, Internet, blockchain, cloud computing, artificial intelligence and so on, which have a significant impact on the financial market and the supply of financial services. 2015 is a key year for the development of financial science and technology in China
The traditional DEA model can only measure the relative efficiency of the book abuse unit at a certain time, but the empirical research on the impact of financial technology on the operational efficiency of traditional commercial banks is based on the study of dynamic changes in a continuous period of time, which is contradictory to the use conditions of DEA model
This shows that since 2015, commercial banks have generally adapted to the changes in the financial market caused by financial technology, and have used financial technology to improve their operational efficiency

Summary

Introduction

Financial technology generally refers to new business models, new technology applications and new product services driven by emerging technologies such as big data, Internet, blockchain, cloud computing, artificial intelligence and so on, which have a significant impact on the financial market and the supply of financial services. 2015 is a key year for the development of financial science and technology in China. Financial technology generally refers to new business models, new technology applications and new product services driven by emerging technologies such as big data, Internet, blockchain, cloud computing, artificial intelligence and so on, which have a significant impact on the financial market and the supply of financial services. The increasingly mature and rapid development of financial technology changes people's trading habits and China's financial structure, and deepens its influence on traditional commercial banks. Blockchain, artificial intelligence and big data effectively reduce information asymmetry, which provides digital opportunities for commercial banks to adjust the credit structure. In terms of intermediary business, intelligent investment advisory, blockchain, mobile banking and online banking have played an active role in reducing cost, improving efficiency and expanding business for commercial banks, but at the same time, the development of financial technology has occupied the intermediary business market of banks to a certain extent. In the context of the rapid development of financial technology, research on the operational efficiency of commercial banks, which are in the dominant position of the financial industry, is of great significance to the development of commercial banks and the future development of China's financial industry

Literature Review

DEA Model

Malmquist Index

Data Selection

Data Sources

Analysis of Operational Efficiency of Banks

Analysis on the Annual Efficiency of Commercial Banks

Conclusion

Findings

Suggestions