FinTech and Commercial Banks' Performance in China:
The Current Status and Lessons Learned from Our Data Analysis
Xihui Chen
, Xuyuan You and Victor Chang
Teesside University Business School, Teesside University, U.K.
University of Leeds, Leeds, U.K.
Artificial Intelligence and Information Systems Research Group, School of Computing and Digital Technologies,
Teesside University, Middlesbrough, U.K.
Keywords: FinTech, Commercial Banks, Customer Satisfaction, Customer Expectation, Service Quality, Work
Efficiency, Firm Performance.
Abstract: As the impacts of the COVID-19 pandemic play out globally, the banking industry has been affected in both
positive and negative ways, with the crisis creating both opportunities and threats for the collaborations
between FinTech and banks. The aim of this study is to investigate the impact of FinTech products (FTPs) on
commercial bank’s performance in China. Required data are collected with a quantitative approach and two
self-designed questionnaires were distributed to customers and employees of commercial banks in China. The
gathered data were examined using the structural equation modeling technique. The results of this study reveal
that the perceived usefulness (PU) of FTPs has positive and significant impacts on customer satisfaction, low
expectation of bank employee assistance, bank’s service quality and employee work efficiency. Additionally,
the perceived difficulty of use (PD) of FTPs has negative and significant impacts on customer satisfaction and
low expectation of assistance. Interestingly, there is a positive and significant relationship between PD and
banks' service quality and work efficiency, meaning that the service quality and work efficiency can reduce
some shortcomings of using FTPs. This study recognizes the need to enhance the understanding of FTPs on
non-financial firm performance.
There is an ever-increasing use of financial technology
(FinTech) products to attain greater profits. Especially,
Following the Financial Stability Board (FSB, 2017),
this study defines FinTech as an array of financial
technology providers that enables seamless and better
financial services (e.g., new applications, products,
business models and processes) for businesses to even
individual users. Ky et al. (2019) found that the
successful implementation of FinTech products
(hereafter, FTPs) in banks increases bank profitability
and efficiency and enhances customer interactions and
develops new customer segments. This is particularly
important as a collaboration between banks and FTPs
is the key to provide solutions in the "new normal"
business environment that the COVID-19 pandemic
Corresponding author
has brought about. Wang et al. (2020) concluded that
FTPs play a vital role in facilitating a bank’s risk-
taking behavior to achieve that bank's main corporate
objectives, absorbing and maintaining customers by
providing quality and timely service, as well as
reducing customer costs and increasing bank
Apart from this bright side of FinTech, its
implementation is time-consuming, and there are high
costs in maintenance, upgrading and training for both
customers and employees, and the possible risk of
failures. Considering the imperative of engaging and
building strong relationships to serve the customers
best, obtaining a positive culture regarding
technology among employees in the competitive
environment, and considering the possible investment
risks in FinTech, it is important that business
Chen, X., You, X. and Chang, V.
FinTech and Commercial Banks’ Performance in China: The Current Status and Lessons Learned from Our Data Analysis.
DOI: 10.5220/0010483500330044
In Proceedings of the 3rd Inter national Conference on Finance, Economics, Management and IT Business (FEMIB 2021), pages 33-44
ISBN: 978-989-758-507-4
2021 by SCITEPRESS Science and Technology Publications, Lda. All rights reserved
activities related to FTPs be handled with care (Alt et
al., 2018). Although COVID-19 is transforming how
businesses use digital technology overnight, which
will make an investment in FTPs more attractive
(Wójcik and Ioannou, 2020), a holistic and integrated
approach between the components of business
processes, people and technology is required for
maximizing investment return and successful
corporate performance (Yang et al., 2009).
FTPs and their impact on bank performance have
been the focus of many researchers (e.g., Odawa,
2016; Phan et al., 2020; Rega, 2017; Wang et al.,
2020). A review of the literature has shown that many
studies have empirically investigated the impacts of
FTPs on organizational performance. For example,
studies tested FTPs on internet banking and mobile
banking (Ky et al., 2019; Okiro & Ndungu, 2013);
self-service and machine learning (e.g., Odawa, 2016;
Gomber et al., 2018; Noor et al., 2019), and
cybersecurity (Chang et al., 2020; Meng et al., 2019;
Ng & Kwok, 2017). Additionally, empirical studies
measured bank performance differently, but ROA
(return on assets, Ky et al., 2019), ROE (return on
equity, Phan et al., 2020) and survey (Kianto et al.,
2013) are the most commonly used methods. More
studies have been published and called for an
investigation of the impacts of COVID-19 on the
relationship between FTPs and organizational
performance (e.g., Wójcik and Ioannou, 2020; Akpan
et al., 2020). This study use survey to measure banks'
non-financial performance for two key reasons. First,
it helps establish a connection between banks'
strategies and daily tasks among the customers and
employees. Second, there are non-controllable
external risks (e.g., COVID-19) that would affect the
revenue and expenses if a bank faces that. In such
circumstances, looking at the financial measures
might only give a dismal picture of a bank. Therefore,
measuring banks' performance non-financially
provides a more holistic view. For example, having a
high customer satisfaction rate and employees
worked efficiently would mean that bank would be on
track soon after the COVID-19 pandemic with the
help of FTPs implementation.
Considering the perceived usefulness (PU) and
the perceived difficulty of use (PD) of FTPs (David,
1989) and their effects on firm performance (from
both customer and employee perspectives), to the best
knowledge of the authors, no study has as yet focused
on the perceptions of both the customers and
employees, especially in the context of commercial
banks in China. This study addresses the gap using
David’s (1989) technology acceptance model to
understand the PU and PE of FinTech and their
impact on bank performance via banking and FinTech
cooperation literature review. Moreover, this study
seeks to build an FTPs-Performance conceptual
framework (Figure 1) with the ability to measure the
FTPs and performance factors and test the framework
This study used several non-financial performance
measures to gauze banks' performance in non-
monetary terms, such as customer satisfaction, the
expectation of employee assistance, bank service
quality and employee work efficiency. Two question-
naires were self-designed, one for customers and the
other for bank employees. There were 307 customers
who participated in the customer questionnaire and 94
bank employees who participated in the employee
questionnaire. The structural equation modeling
method was used to test the conceptual framework.
The customer questionnaire results revealed that high
levels of perceived usefulness of FTPs are associated
with high customer satisfaction and low expectation of
bank employee assistance. The results also showed that
the difficulty of using FTPs causes low customer
satisfaction and requires more assistance from bank
employees. In the employee questionnaire, we found
that the perceived usefulness of FTPs has positive and
significant impacts on banks' service quality and
employee work efficiency. Interestingly, a positive and
significant relationship showed the difficulty of FTPs'
use and service quality and work efficiency, meaning
that service quality and work efficiency can overcome
the difficulty of using FTPs.
This study extends the current literature on
banking and FinTech and makes several
contributions. First, most empirical studies tackling
FinTech focus mainly on its impacts on society,
customers, organizational risk behaviors and
cybersecurity (Alt et al., 2018; Noor et al., 2019;
Wang et al., 2020). To our knowledge, this is the first
study to examine and conduct an analysis of FTPs
implemented in commercial banks in China.
Specifically, we intend to examine the PU and PE of
FTPs from the perspectives of both the customers and
bank employees. Second, this study adds to the
literature examining the FTPs and bank performance
relationship. Following Kianto et al. (2013) and
Odawa (2016), instead of using the proxies (e.g.,
ROA, ROE, and net interest margin) traditionally
considered in the empirical studies on banking
literature, this study used a survey and measured bank
performance from a non-financial perspective to
investigate the impact of FTPs on customers
(satisfaction and expectation) and employees (service
quality and work efficiency). Third, this study
complements the banking and FinTech literature that
FEMIB 2021 - 3rd International Conference on Finance, Economics, Management and IT Business
explores the determinant of bank performance using
non-financial measures in Chinese commercial banks
with a possible impact of the COVID-19 pandemic.
This study is structured as follows. Section 2
presents the FinTech revolution and its application in
the financial industry. Section 3 discusses the
literature review on FinTech, bank performance and
conceptual framework specification. Section 4
provides the research method and data. Research
results and practical implications are discussed in
Section 5 and Section 6 concludes the paper.
FinTech has always been associated with the terms
“advanced” and “competitive” in the financial industry
(Acar & Çıtak, 2019; Gai et al., 2018; Wójcik and
Ioannou, 2020). Gai et al. (2018) stated that the
purpose of FinTech is to enhance service quality and
work efficiency of financial services by using
information technology applications. Fintech can also
be used in P2P (peer-to-peer) lending, distributed
ledger technology and third-party payments (Acar &
Çıtak, 2019). The Financial Stability Board (FSB)
(2019) defined FinTech as new frontier technologies,
including AI (artificial intelligence), blockchain and
big data that promote emerging business models, new
technology applications and advanced product
services. Following this definition, FinTech products
(FTPs) are one form of FinTech leading the financial
sector towards digital banking and suppressing the
traditional banks. It is certain that the agnostic to
COVID-19’s severity will change the face of the
banking sector globally (Wójcik and Ioannou, 2020).
This section will introduce the FinTech revolution and
its applications in the financial industry and the
Chinese banking sector.
2.1 The Worldwide Application of
FinTech makes the world more inclusive (Gupta &
Mandy, 2018). Regardless of whether transactions are
C2C (customer-to-customer) or B2B (business-to-
business), FinTech innovation has made international
money transfers easier than ever (Par, 2015). Thus,
FinTech companies attract enormous venture capital
investment worldwide to develop and create new
FTPs. According to Accenture (2016), in the first
quarter of 2016, the global investment in FinTech
rose to $5.3 billion, which is a 62% increase from the
same period in 2015. Moreover, based on the 2017
statistics report on BCG FinTech Regulatory Tower,
$130 billion was invested in 12,000 FinTech
companies globally in equity financing, more than the
GDP of Angola, according to the World Bank.
Studies (e.g., Gupta & Mandy, 2018; Ng & Kwok,
2017) recognized that FinTech provides companies
with cutting-edge technology and helps them thrive in
the fast-changing competitive business environment.
Richard Lumb, the Accenture Group’s chief
executive, commented that companies across the
world are chasing the tide of industry 4.0, as
inventions and new service models merge FinTech
into the traditional financial service industry
(Accenture, 2016). Akpan et al. (2020) commented
that such digital transformation is considered a
vehicle for exceeding customer demands a
competitive advantage most companies require to
survive the COVID-19. It also changes the way
companies interact with their customers. For
example, in the wake of the COVID-19, customers of
all ages quickly learned to use online banking
services when the bank branches closed with short
notice. Many customers are digitally savvy,
especially the millennials and Generation Z.
Customers have increased their expectations they
prefer greater convenience, lower costs, rapidity and
reliability when choosing financial services. Indeed,
many FinTech products have made an incredible
impact on people’s daily life activities, such as low-
cost and real-time remittance, real-time payment and
loan approval, and remote account opening. In more
detail, the use of video and face recognition
technology in the remote account opening function
allows customers to open bank accounts on mobile
devices without visiting a branch (Gupta & Mandy,
2018). The experience with COVID-19 teaches the
world that digital banking is the way forward.
2.2 The Use of FinTech in the Financial
2.2.1 Transaction Processing
Transaction processing practice focuses on helping
companies find, develop and maintain best-in-class
service by using FinTech products. With the help of
FinTech, transaction processing becomes swifter and
more cost-effective (Gupta & Mandy, 2018). Banks
can also continue their services during the COVID-19
crisis. For example, the blockchain cuts down on the
need for trusted third-party banks to verify
transactions and, therefore, lower or avoid the banks’
FinTech and Commercial Banks’ Performance in China: The Current Status and Lessons Learned from Our Data Analysis
charge fees in a transaction (Nguyen, 2016).
Additionally, the invention of FTPs for digital
payment methods (i.e., Alipay, WeChat and Apple
Pay) has become the public domain trend. Perhaps
unsurprisingly, such digital payment methods
appealed to generations with cash flow and raised on
cell phones. Not to mention how COVID-19 sped up
the adoption of digital payments.
2.2.2 Investment and Risk Management
Regardless of the type of investment, there will always
be some risk involved. Fintech can help banks improve
risk management significantly through big data (Gai et
al., 2018). Big data allows banks to collect and analyze
data to identify customer behavioral patterns, thus
allowing them to personalize responses, products and
services through a tailored marketing experience. In
responding to the COVID-19 challenge, the growth of
remote working implies that an incredible amount of
online data and information are being collected and
shared across networks. Data analytics can be used to
explore and analyze big data to mitigate risks and
inform better investment decisions with consistent
returns for banks. Big data can also be used to enhance
cybersecurity, detect fraud and prevent potential
malicious actions (Gupta & Mandy, 2018). In
principle, FTPs should provide further opportunities
for banks while their services are in higher demand
during COVID-19.
FinTech has had a huge impact not only on
financial activities (e.g., transactions, investments,
risk management, insurance, financing and budget
applications) but also on regulations and compliance
processes. The bigger the data, the higher the risk the
companies will face (Noor et al., 2019). The COVID-
19 is creating a need for banks to process personal
data for a variety of specific purposes (e.g., managing
and protecting their workforce, customers and the
public) while accumulating user data. Data security
regulations are, therefore, becoming more stringent.
For example, the European Parliament approved and
introduced the GDPR (general data protection
regulation) to place certain restrictions on businesses
worldwide that want to collect and apply users’ data.
Council of Europe issued a Data Protection Report
(2020) to ensure greater respect of the rights to
privacy and data protection in the use of digital
contact tracing applications and monitoring tools
during the fight of COVID-19. Additionally, in
China, selling personal data can be punished by fines
and up to seven years in prison, while personal
information buyers can be sentenced to up to three
years in jail and a fine (Dentons, 2020).
2.2.3 Compliance Processes
The 2008 financial crisis impacted the financial
industry by spawning new regulatory actions
internationally to improve and strengthen the
resilience of the financial system. The real-name
financial transaction system is one of the tools that
can effectively prevent money laundering because it
allows the source of funds to be traced. Traditionally,
all financial institutions manually verified the real
name of an individual customer or legal entity. This
system was subject to human error and bribery.
However, with the emergence of FinTech, big data,
AI and facial recognition make the verification
process more reliable with less human error, thus
boosting the bank’s transaction volumes and saving
time for both the bank and customers (Noor et al.,
2019). More importantly, such a verification process
helps banks maintain "business as usual" during
COVID-19 even the branches have reduced hours or
2.2.4 Mobile Banking
Mobile banking is the most mature FTP in internet
finance, but its demand and growth for financial
services among Chinese customers are far from
slowing. Customer interaction and affinity are
expanding, and online-to-offline mobile banking
functions through smartphones have become another
combat zone where banks are competing fiercely for
market shares, including traditional financial
institutions. In 2019, mobile banking sites averaged
326 million visits per month in China (CIW Team,
2019) a 10.9 percent increase compared to 2018.
There was a 200 percent jump in new mobile banking
registrations. In comparison, mobile banking traffic
rose 85 percent when the government-imposed
lockdown in April 2020 due to COVID-19, according
to Fidelity National Information Services (FIS).
Laukkanen (2017) commented that mobile banking
allows customers to access various financial services
via smartphones. For example, in the Bank of China
mobile app overseas version, apart from the common
services (e.g., branch finder, balances, transfer and
remittance and accounts overview), the app also
provides lifestyle services (e.g., prime student
service, financial consultation, mortgage information
and tips to avoid coronavirus scams) and wealth
management (e.g., global accounts and currency
converters). These services provide opportunities for
customers to understand their financial position and
tips for managing their funds and hunting for higher
investment returns internationally (Giovanis et al.,
FEMIB 2021 - 3rd International Conference on Finance, Economics, Management and IT Business
2019; Wang et al., 2020). Moreover, customers can
interact with their banks via mobile banking, regardless
of time and location. Customers can also access details
of their accounts whenever and wherever necessary.
Mobile banking is rapidly becoming the preferred
digital channel. Both Giovanis et al. (2019) and Ky et
al. (2019) see that mobile banking will replace
traditional banking it is just a matter of time.
Furthermore, the way to log in on mobile banking is
fairly secure a password, a one-time e-token
password and verification code are required to log in.
In fact, there are more banking services available
on phone apps in the Chinese market. In the same
Bank of China mobile banking app, aside from the
banking services available in the overseas version,
other daily life services are also available in the
Chinese version. For example, a customer can use
live chat, manage utility bills, select and top-up social
media memberships, call a taxi, check medical
insurance, do differentiated product matching,
purchase restaurant vouchers and more.
Although FinTech has steadily evolved to become
a part of our everyday life, customer expectations are
changing, and the financial services industry is not
immune to these new demands. Moser (2015) found
that people’s expectation for mobile banking is higher
than their penetration rate. Moser (2015) stated that
mobile banking is still at the developmental stage in
its life cycle. The COVID-19 shock has certainly put
an increased emphasis on mobile banking.
3.1 FTPs and Bank Performance
FinTech has always been associated with Digital
innovation and FTPs (e.g., ATM, VTM, and mobile
banking) that promote inclusive financial services
and provide a new impetus to the banking sector to
improve its performance in several ways. For
example, to improve the relationship with customers'
satisfaction and expectation, staff service quality and
work efficiency, and profitability. Performance is
important to all companies, and there are two
directions to measure organizational performance:
one is financial performance and the other one is non-
financial performance. Studies (e.g. Ky et al., 2019)
have examined the implications for banks in the use
of FTPs and how it affects their profitability using a
wide range of financial variables traditionally
considered in the banking literature (e.g., operational
performance, risk profile, and leverage, net interest
margin, ROE and ROA). Non-financial performance
is related to corporate social responsibility, customer
satisfaction and expectation, service quality, and
work efficiency (Richard et al., 2009). Odawa (2013)
found the self-service technologies can improve
service efficiency, increasing customer satisfaction,
market shares and the customer base among
commercial banks in Nairobi.
According to Yang et al. (2009), FinTech is one
of the important elements and tools in shaping and
evolving financial innovation. Financial innovation
has some risk, but its value is evident in both
theoretical and empirical literature (Gomber et al.,
2018; Ng & Kwok, 2017; Wang et al., 2020; Wójcik
and Ioannou, 2020). In other words, customers should
be satisfied if the FinTech products are useful and
easy to use. Meanwhile, a successful FinTech
implementation in a bank should make employees’
work serving customers easier and maintain the
services while working remotely during COVID-19.
David (1989) built a technology acceptance model
(TAM) to test the potential users’ motivation to use
the information system. Ha and Stoel (2009) used the
TAM to explain the relationship between the causes
of users’ attitudes, beliefs, intentions and behaviors.
They found that the capability of a technology to be
used advantageously and to create freedom from
difficulty or great efforts affected users’ attitudes
towards accepting a new technology (David, 1989).
In turn, these attitudes will affect intention and
behavior accordingly (Lee and Lehto, 2013). Using
both TAM and perceived risk theory, Kansal (2016)
found the financial risk is negatively associated with
both the users’ satisfaction and expectations of self-
service banking service, and the increased
performance risks reduced the customers’ intention to
use and trust technology. Additionally, Kim and Woo
(2016) investigated consumers’ expectations and
acceptance of QR (quick response) codes in food
traceability systems. Their results showed that the
ease of use of QR codes encouraged customers’
purchases. In this context, we assume that the effects
of FTPs implementation on banks' performance may
depend on the usefulness and usage difficulties of
FTPs among the users (e.g., customers and
3.2 The Perceived Usefulness (PU) of
3.2.1 Processes Automation
Automation is the focus of intense interest in the
global banking sector. Banks are prone to offer
partially or totally automated machine services and
FinTech and Commercial Banks’ Performance in China: The Current Status and Lessons Learned from Our Data Analysis
move away from the labor-intensive business
operational models. This improves the convenience
and accessibility of bank services. The emergence of
FTPs enables customers to access the services 24
hours a day and seven days a week (Mazana et al.,
2016). Many financial professionals gave high ratings
to FTPs Paul Volcker (2009) is one of the former
chairpersons in charge of the US Federal Reserve
Volcker commented that ATMs are the most
important financial innovation that he has ever seen
in the past 20 years because ATMs enable customers
to handle the most routine, in-branch transactions.
This advantage offers customers who prefer not to
visit a local bank branch or interact directly with bank
staff, particularly when this is the only option during
COVID-19. Furthermore, ATMs reduce the human
resource costs of bank staff and branch establishment
costs because customers can self-complete services
(e.g., deposit or withdrawal and opening and closing
bank accounts), which traditionally were done with
the help of staff.
3.2.2 Customer Satisfaction
FTPs help banks attract more customers. There were
2.5 billion adults who did not have bank accounts in
2010. This was either because they had no network
signal at their remote location or because the
geographical environment did not meet the
construction standard for bank branches (Mazana et
al., 2016). However, this group of people can still be
considered as potential customers for banks.
There are fewer costs in solving information
asymmetry issues. Information is much more
accessible for people in general, especially for
customers who have always been with disadvantages
in this regard (Gupta & Mandy, 2018). FinTech
products enable customers to handle banking
business with a self-service function, thus enhancing
their participation and experience. Transparency of
information decreases the perceived risks and
improves customer trust (Kaushik et al., 2020).
FTPs are cost-effective, too. For example, unlike
in the traditional banking process, in which customers
in China pay for the cost of opening a new account,
with the help of FTPs, customers can complete the
account opening process for free. The exemption of
these expenses in the transaction process reduces the
costs to customers and should increase customers’
preference for using FTPs to make banks more
competitive during the COVID-19 challenges.
3.2.3 Competitive Advantages
After 2010, FinTech start-ups developed rapidly
consider, for example, Alibaba with its innovative
financial product, Alipay. These third-party payment
platforms threaten the monopoly of traditional
commercial banks by providing customers with lower
costs and higher efficiency (Temelkov, 2018).
According to the financial statistics report from the
People’s Bank of China, RMB deposits in January
2014 decreased by 940.2 billion yuan. Most of the
people admitted that they feel safe and prefer to save
money on a third payment platform, such as WeChat
and Alipay (Yan, 2015).
However, FTPs help commercial banks regain
competitive advantages and boost market shares by
increasing the number of customers and providing
additional services. Sannes (2008) found that in
America, one in every three banks reported increased
numbers of customers who started registering in their
banks when they introduced FTPs. In China,
commercial banks are launching mobile banking apps
one after another and are constantly updating their
systems to provide cutting-edge services to
customers. For example, the mobile banking app of
the China Merchants Bank has been upgraded to an
eighth-generation version since 2010 (CMB, 2020).
Its services cover basic banking business and meet the
demands of most individual customers and corporate
clients. Additionally, their mobile banking also
cooperates with third-party customers, such as Didi
Taxi and Starbucks, to provide value-added services
to customers (Guo, 2019). China Merchants Bank is
the second-largest bank in terms of the number of
users on their own mobile banking app. By 2019, the
number of users on the China Merchants Bank’s
mobile banking app has reached 114 billion, with a
19.1 percent market share. Although many phone
apps are introduced to customers by online finance
companies (e.g., Alipay), nearly all commercial
banks in China have now introduced FTPs, which has
diluted the market share. This phenomenon gives the
banks a foundation for moving online and staying
competitive to cope with COVID-19. Therefore,
FTPs have become a useful tool for balancing
traditional banks and online financial companies.
Hence, we propose the following hypotheses:
H1a – There is a positive relationship between the
perceived usefulness (PU) of FTPS and customer
H2a – There is a positive relationship between PU
of FTPS and customer expectations of employee
FEMIB 2021 - 3rd International Conference on Finance, Economics, Management and IT Business
H3a – There is a positive relationship between PU
of FTPS and service quality.
H4a – There is a positive relationship between PU
of FTPS and work efficiency.
3.3 The Perceived Difficulty of Use
(PD) of FTPs
The emergency of FinTech has created both threats
and opportunities in the banking sector. FTPs rely on
intelligent data processing and deep learning to create
value for financial services (Gai et al., 2018).
However, this process involves issues, for example,
those of data security and information privacy.
Therefore, financial service institutions are constantly
experiencing cyberattacks. The Cybersecurity report
(SVB, 2015) highlighted that only 35 percent of
companies think they can overcome the cyber threat
and do better in business with FTPs implementation.
Morgan (2015) predicted that global investment in
cybersecurity would reach $170 billion by 2020.
Following the attack of COVID-19, this predicted
figure will only grow. Indeed, more companies are
seeking to conduct data collection, processing and
storage through the cloud (SVB, 2015). However,
according to Ng et al. (2017), regulation on the cloud
is still developing. When companies use public cloud
data, it is difficult to find the physical location of the
data. Also, the cross-cutting service modes in the
network leave opportunities for improper use of
information by hackers and criminals (Gai & Sun,
Data breaches, cyber ransomware and system
intrusion, are the three commonly seen cybersecurity
issues (Ng and Kwok, 2017). For example, Capital
One is the seventh-largest bank in America and the
fifth-largest credit card issuer in the world. In 2019,
Capital One informed the public that its database was
hacked, and about 106 million bank card users and
applicants' information was stolen (Sohu, 2020).
Additionally, in 2017, many sectors and particularly
the financial sector were affected by the Armada
Collective cybercriminals. Companies received
malicious emails and were asked to pay ransoms of
10 bitcoins (the market value of around $30,000) as
protection fees. In the same year, a hacking gang
abused the SWIFT (Society for Worldwide Interbank
Financial Telecommunications) banking network.
Consequently, $60 million worth of funds were stolen
from the Far Eastern International Bank in Taiwan
(Sohu, 2020). There is also evidence that remote
working increases the risk of a successful
ransomware attack significantly due to the effect of
lockdown on the spread of COVID-19 (Ferbrache,
Customers have less information and expertise in
financial technology than banks, and this can lead to
their uneasiness about using FTPs. According to the
perceived risk theory perspective (David, 1989),
customers will reduce purchasing when they cannot
predict the consequences or value of the purchasing
behavior. Factors such as security, performance and
time may affect customers’ satisfaction and
expectations of the product or business service (Lee,
2013). Phan et al. (2020) stated that FTPs provide
new transaction methods and uncertainties to both the
businesses and the users. These uncertainties can be
hacker attacks, identity disclosures and internet fraud.
These uncertainties can easily threaten the safety of
customers’ information and property and bring usage
risk to banks. Financial e-fraud is an emerging
problem to be tackled in the FinTech industry (Meng
et al., 2019) and the COVID-19 sparks an upward
trend in cybercrime (Akpan et al., 2020; Ferbrache,
2020). Therefore, customers will consider the safety,
individual information privacy and performance
efficacy of FTPs before using them. In turn, affected
customers will expect more help and assistance from
the bank.
Hence, based on our analysis and literature
review, we propose the following hypotheses:
H1b There is a negative relationship between the
perceived difficulty of use (PD) of FTPS and
customer satisfaction.
H2b – There is a positive relationship between PD
of FTPS and customer expectations of employee
H3b There is a negative relationship between
PD of FTPS and service quality.
H4b There is a negative relationship between
PD of FTPS and work efficiency.
Figure 1 presents the conceptual framework based
on the proposed hypotheses.
Figure 1: Conceptual framework.
FinTech and Commercial Banks’ Performance in China: The Current Status and Lessons Learned from Our Data Analysis
4.1 Questionnaire and Sampling
We self-designed two questionnaires, one for bank
employees and the other for bank customers. Both
questionnaires were composed based on the five-
point Likert scale, strongly disagree (one point) to the
strongly agree (five points) continuum.
For the customer questionnaire, there were 26
questions divided into three sections.
Section A: Fifteen items related to the FinTech
products characteristics, including eight items for PU
and eight items for PD of FTPs.
Section B: Four items related to bank
performance, including two items for customer
satisfaction and two items for customer expectations
of employee assistance.
Section C: Four items related to the demography
of the respondents. Demographic information
includes the customer’s age, gender, the number of
years holding a bank account, and the knowledge of
the respondents about FTPs in the bank.
For the employee questionnaire, there were 23
questions divided into three sections.
Section A: Eleven items related to the FinTech
product characteristics, including seven items for PU
and four items for PD of FTPs.
Section B: Eight items related to bank
performance, including five service quality items and
three work efficiency items.
Section C: Four items related to the demography
of the respondents. Demographic information
includes the employee's age, gender, the number of
years working in the bank, and FTPs in use in the
Both questionnaires were originally designed in
English and then translated from English to Chinese
by a native Chinese speaker, an undergraduate
studying at an anonymous UK University and back-
translated into English by a professional translator.
An online survey tool (i.e., WeChat) was used for
survey distribution between July to September 2020.
The customers and employees were accustomed to
regular use and access to WeChat and the internet.
In total, 400 completed questionnaires (307
customers and 93 employees) were submitted and
used for the statistical analysis of this study. Bollen
(1989) recommended researchers using a multiplier
of a minimum of five to determine the sample size
(Rahi et al., 2019). That means a minimum of 95
respondents in each survey should be determined. We
received a good sample size in both the customer and
employee surveys. Although the employee survey
was short for 2 respondents, the 100 percent
completion rate helped the test be statistically valid.
First, we conducted descriptive statistics and tested
the reliability and validity. Second, the structural
equation modeling method was used to investigate the
impacts of FinTech products on bank performance.
4.2 Reliability and Validity
We used Cronbach’s alpha to test the reliability
coefficient of the questionnaires (Hair et al., 2017).
Individual items were greater than the 0.70 thresholds
suggested by Hair et al. (2017). This result indicated
that there was no reliability issue in the data. The
internal consistency of items was tested by item-total
correlations. All results were above 0.4 levels
(Loiacono et al., 2002), indicating that both
questionnaires demonstrate a strong discrimination
validity. Additionally, we conducted an exploratory
factor analysis. The result indicated that the
distribution of values on questionnaires was adequate.
The lowest eigenvalue for customer (2.26) and
employee (2.84) questionnaires were significant at
above 1.00.
Table 1: Test of the Hypothesized Model.
Note: *p<0.10; **p<0.05; ***p<0.01
5.1 Testing Hypotheses and Results
The hypothesized relationships were examined (see
Table 1), and the results from path coefficients and t-
value demonstrated that FTPs affect bank
performance significantly. Consistent with Kansal
(2016), our results show that a high level of
usefulness of FTPs causes high customer satisfaction
Standard error of
t value
H1a PU to customer satisfaction 0.797 0.036
H1b PD to customer satisfaction -0.058 0.032
PU to customer expectation of
-2.93 0.051
PD to customer expectation of
0.791 0.046
PU Advantages to service
0.787 0.058
H3b PD to service quality 0.129 0.062
H4a PU to work efficiency 0.818 0.065
H4b PD to work efficiency 0.131 0.070
FEMIB 2021 - 3rd International Conference on Finance, Economics, Management and IT Business
and low expectations of employee assistance on using
FTPs; thus, H1a and H2a are supported. Additionally,
the results also show that a high level of difficulty in
using FTPs will lead to low customer satisfaction and
high levels of demands requesting help from
employees; therefore, H1b and H2b are supported. In
the past, FinTech primarily referred to the support of
bank end systems of banks, but the new developments
in FinTech and the cooperation between FinTech and
banks have changed how the financial services
support its customers (Phan et al., 2020). In general,
FTPs have seeped into individual users’ everyday
life. Whether it is mobile banking, reading and
investing, wealth management, and overseas
transactions, FinTech has steadily evolved to become
a part of people's daily activities, and more areas are
expected to be influenced. Due to the ease of
managing and accessing banking without time and
location restrictions, more customers are willing to
accept FinTech and view it as a cost-effective way to
interact with the bank. With the onset of the ongoing
COVID-19 pandemic worldwide, there has been a
huge change in how people run their businesses and
how they live. FTPs enables bank customers to
manage their accounts and funds and facilitate their
payments through their smartphone or any other
portable devices with less need to rely on brick and
mortar services (Ky et al., 2019). Gone are the days
when customers had to physically go to a bank branch
to open an account or complete a transaction.
From the employee perspective, this study found
a high level of usefulness of FTPs leads to high
service quality and work efficiency; therefore, H3a
and H4a are supported. We also found that although
it might be hard to accept FTPs due to the difficulty
of use and cybersecurity threats, employees are still
confident in the service quality and their work
efficiency. Therefore, H3b and H4b are rejected. This
is in line with the findings of Wang et al. (2020) that
most of the processes of financial services are
handled with the help of FinTech. Therefore, having
a technology-supported organizational culture (i.e.,
employee perspective) will facilitate the FTPs’
implementation. The involvement of employees in
implementing financial innovation strategies will
result in better organizational performance.
Furthermore, banks usually have enormous customer
bases. Not every bank or bank branch has enough
workforce or the time to troubleshoot problems daily
for every customer. However, this has changed with
the help of FTPs. FTPs help banks leverage their big
data to suggest relevant services, deals and products
to their customers. The customization is a tool to
engage the customers in direct and open
conversations. It allows the bank employees to focus
on strategic initiatives rather than poring over
paperwork or other mundane work.
5.2 Recommendations
Our findings presented novel insights into the
convenience of FTPs for both customers and
employees. More specifically, when customers and
employees perceived the usefulness of the FTPs and
ease of use at work and their daily activities, they are
more willing to accept FTPs. With the help of FTPs,
banks can then collect large data and offer
personalized products and services based on
customers' financial behaviors and personal
preferences, building trust in society and growing
customer loyalty. Revenue will then automatically
follow. These massive personalization tasks can be
accomplished if banks are looking towards a third-
party collaboration strategy, for example, by teaming
up with FinTech and software companies to provide
different types of technological capabilities that
traditional banks do not possess. In the post-COVID-
19 scenario, banks should continue their commitment
to strengthening ties with the FinTech ecosystem,
from which new opportunities for the financial and
banking sector will keep emerging.
Nevertheless, our conceptual framework points
out that service quality and work efficiency could
potentially reduce FTPs’ shortcomings. In other
words, banks should continue considering the
increased use of FinTech in their employees' work
routine. In fact, because of the COVID-19 pandemic,
when many activities have ground to a halt,
innovation has been happening at a faster pace with
technology to find solutions quickly (Akpan et al.,
2020). Managers in banks should adjust the
management measures to transform the bank from the
traditional bank to the digital bank. For example, the
bank should hire excellent talents with scientific and
technological backgrounds to help improve the
technical level of the banking system. Moreover,
given the perennial negative stimulus that regulations
always lag behind innovation, hacking and
identifying theft are unavoidable. R&D departments
should monitor the occurrence of cyber-attacks in
real-time and take reasonable measures to strengthen
the cybersecurity system. Echoing Chang et al.
(2020), this study recommends that the banks
improve the system supervision to the financial
technology with the reasons for fraud prevention and
illegal data sharing avoidance due to one FinTech
company serving multiple banks. For example, the
banks should act promptly to stop long-term security
FinTech and Commercial Banks’ Performance in China: The Current Status and Lessons Learned from Our Data Analysis
stagnation and set up a separate department for cloud
storage systems to make the data traceable and
manage digital identities. Otherwise, cyber-attacks
can open chinks (e.g., rogue and biased programs) in
the armor of banks' cyber defense, thus compromising
the reliability of FTPs.
Furthermore, society should develop more
talented leaders who have tech fluency, drive
innovation to transform technologies, and inspire
change with a forward-looking and innovative vision.
For example, the government or education authority
should encourage and facilitate schools setting up
FinTech-related courses, thus enabling people to
understand and use FinTech at a younger age. This
will also contribute to future FinTech inventions.
Currently, EU countries and America have more
advanced experience in FinTech. Countries that are
still in the developmental stages of FinTech should
learn from them, perhaps by sending overseas
students to study and exchange or encouraging
domestic companies to work on foreign projects
through investment.
5.3 Limitations and Future Work
One of the limitations of this study applies to the
survey approach because it is difficult to generalize
and expand the findings to a larger population. This
study was conducted for the banking sector, aiming to
investigate the impact of FinTech products on non-
financial performance. In this case, the statistical
results are valid based on commercial banks in China.
Future studies are suggested to investigate different
industries related to FTPs, such as hotels, hospitals,
transport, or other industries with a different or larger
sample. FinTech covers many aspects of these
industries, for example, blockchain, bitcoin and P2P
business operation modes. Future studies may
consider exploring these technologies and their
impacts on organizational performance. Additionally,
due to the limited access to bank employees, only 93
employees participated in the data sample for this
study. Researchers who have personal connections
with the bank employees might have the advantage of
access to a larger data sample size in future studies,
and the results might be different when compared to
this study.
The aim of this study was to examine the impact of
perceived usefulness and difficulty of use of FinTech
products on an organization's non-financial
performance (customer satisfaction and expectation,
service quality and work efficiency) among the
Chinese commercial banks by proposing eight
hypotheses. This study offered critical practical
implications and contributions to the debate on using
FTPs to galvanize the banking industry by enhancing
non-financial performance. One of the contributions
is the use of non-financial measures to boost banks'
competitiveness by offering important additional
knowledge that can indirectly reflect the PU and PE
of FTPs in the banking sector. Different from other
studies (Phan et al., 2020; Wang et al., 2020) that used
financial performance measures, this study
scrutinized the effects of PU and PE effects on bank
performance by capturing and analyzing the
perception of FTPs among the key stakeholders (i.e.,,
customers and employees) in the assessment of banks'
non-financial performance. As the COVID-19
pandemic accelerates front-end digitization, FTPs can
further extend into products and services that fulfill
customers' non-financial needs. Also, to combat the
challenges brought by COVID-19, FTPs allow the
bank to respond to a greater number of customer
demands and vital operations being performed at an
uncertain time. Therefore, four hypotheses were
developed in our conceptual framework and each of
them was identified and supported by the two
perspectives (i.e., customers and employees). Thus,
eight sub-hypotheses were tested. This approach has
been effective after statistically tested on the eight
sub-hypotheses and revealed a deeper structure of the
relationship between FinTech and bank performance.
In this paper, we can conclude that FTPs can be a leap
forward due to the acceptance by both customers and
employees, and also survival the fittest because FTPs
take a more significant role in the financial industry
given the ongoing provision of digital services during
the global COVID-19 crisis.
This work is partly supported by VC Research (VCR
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