DOES EXTERNAL FINTECH COLLABORATION IMPROVE THE PROFITABILITY OF COMMERCIAL BANKS? — MICRO-EVIDENCE FROM CHINA’S LISTED COMMERCIAL BANKS

In the context of financial digitization, fintech collaboration with external enterprises is progressively emerging as a pivotal way for commercial banks to accumulate specialized talent, overcome technological challenges, and enhance profitability. Meanwhile, banks also face numerous formidable challenges such as implementation difficulties and low conversion efficiency. This paper explores the impact of fintech collaborations on the profitability of commercial banks in China. The results show that the fintech strategic collaboration between commercial banks and enterprises significantly enhances the profitability of commercial banks, which is achieved by innovation capacity and business familiarity. The effect is more prominent for commercial banks in the period of banking slump, with larger size, and those without fintech subsidiaries. Additionally, there exists a nonlinear relationship in the impact, and broader collaboration may yield a diminished positive effect. The findings of this paper will provide reference for the debate on the effect of fintech on bank profitability.