Transformation of the banking sector under the influence of FinTech: The experience of China vs the experience of Russia

Abstract

Subject. This article discusses the areas of transformation of the banking sector under the influence of financial technologies, considering the People's Republic of China (PRC) as a case study, as well as techniques of competition between traditional banks and FinTech companies. Objectives. The article aims to identify the main patterns of modification of the PRC banking sector and assess the relevance of China's experience for Russian banks. Methods. For the study, we used a statistical data analysis and econometric panel data-based model building. Results. Based on the primary statistical analysis of the banking sector as a whole and groups of banks in China, the article presents indicators on operational efficiency, retail finance, cash and liquidity management (as opposed to lending business) of financial intermediaries. It reveals some evidences of price competition of banks in the deposit, credit, and intermediary businesses. Using the econometric model, the article confirms the dependence of the credit margin on the market positions of FinTech companies, and the initial margin on the market positions of asset managers. Relevance. The findings may be of interest to national mega-regulators in terms of tracking the main areas of transformation of the banking sector under the influence of financial technologies and analyzing the dumping policy applied by banks for a possible loss of their financial stability in the face of competition with new financial market participants. Commercial banks can adopt the principles of non-price strategies of Chinese banks in competing with IT companies for the client.