How Financial Technology is Redefining Traditional Banks' Competitiveness

Abstract

The rapid development of fintech is profoundly transforming the competitive landscape of traditional banking. This study examines how fintech redefines the competitiveness of conventional banks, systematically analyzing its structural impacts across three dimensions: services, products, and channels, proposing pathways for enhancing competitiveness through digital transformation. Research findings reveal that: at the service level, fintech improves efficiency through intelligent customer service and automated processes, replacing traditional offline service models; at the product level, big data and artificial intelligence drive credit approval, risk management, and wealth management toward smarter and more precise operations; at the channel level, the rise of digital platforms and scenario-based financial services has reshaped customer engagement methods, undermining the traffic advantages of physical branches. Building on this, the study conducts an in-depth analysis using China Merchants Bank and CITIC Bank as case studies. China Merchants Bank's "AI First" strategy demonstrates how AI can be fully integrated into banking service systems, risk control frameworks, and operational processes, facilitating a transition from digitalization to intelligentization. CITIC Bank's "Xiaotianyuan" enterprise ecosystem platform exemplifies how banks leverage a "free standard edition & ecosystem integration" model to deeply embed financial services throughout corporate operations, including business management, finance, capital allocation, and taxation, transforming themselves from financial product providers into digital ecosystem infrastructure providers. The research findings indicate that fintech is not a disruptor of traditional banks but rather a catalyst for reshaping their competitiveness; traditional banks should achieve a strategic transformation from "passive response" to "active leadership" through systematic innovation in their service, product, and channel ecosystems. This paper provides theoretical insights and practical pathways for the digital transformation of traditional banks.