Research on the Mechanisms and Strategies of Financial Product Innovation in Chinese Commercial Banks under the Background of Digital Finance
Department of Accounting, Faculty of Business and Economics, Chongqing Metropolitan College of Science and Technology, Chongqing, China
Faculty of Railway Transportation, Chongqing Vocational College of Transportation, Chongqing, China
Abstract
With the rapid development of digital finance, commercial banks face growing pressures from fintech firms, internet platforms, and shifting customer demands. Against this backdrop, this study develops a theoretical framework grounded in dynamic capability and institutional theories. The framework highlights external drivers, internal transmission mechanisms, and capability reconfiguration, and examines how these elements jointly shape the mechanisms and pathways of financial product innovation in commercial banks.
The study finds that technological advancement, industry competition, and evolving customer needs serve as the primary external drivers of financial product innovation in commercial banks, while strategic orientation and organizational restructuring function as the key internal innovation pathways. These pathways enable banks to reconfigure three core capabilities, including data-driven operations, agile innovation, and ecosystem cooperation. These capabilities facilitating a shift from incremental business optimization to comprehensive digital system redesign.
In addition, the study identifies major challenges related to technological iteration, data governance, organizational structure, market competition, and customer service. It proposes a set of integrated innovation strategies, including modernization of technological architecture, enhanced data governance, organizational–talent alignment, business model transformation, and customer service enhancement. The research concludes that banks should approach digital transformation from a strategic perspective, strengthen innovation culture, and build organizational capabilities to achieve sustainable financial product innovation and long-term competitive advantage.
Keywords:
Digital finance; Commercial banks; Financial product innovation; Dynamic capability; Digital transformationData Availability Statement
As a theoretical study, it is based entirely on the review and analysis of existing scholarly literature and publicly available industry reports cited in the references.
Copyright Notice & License:
All articles published in Global Review of Humanities, Arts, and Society (GRHAS) are licensed under the Creative Commons Attribution 4.0 International License (CC BY 4.0).
This license allows anyone to share, copy, distribute, transmit, and adapt the work, including for commercial purposes, provided that proper attribution is given to the original author(s) and the source.
This work is licensed under a Creative Commons Attribution 4.0 International License.
PDF Downloads
Journal Info
How to Cite
References
Osei L. K., Cherkasova Y., Oware K. M., et al. Unlocking the full potential of digital transformation in banking: A bibliometric review and emerging trend [J]. Future Business Journal, 2023, 9(1). http://doi.org/10.1186/s43093-023-00207-2.
Liu Z., Feng Q., Li H. Digital finance, bank competition shocks and operational efficiency of local commercial banks in Western China [J]. Pacific-Basin Finance Journal, 2024, 85: 102377. http://doi.org/10.1016/J.PACFIN.2024.102377.
Hu H., Wei T., Wang A. Does digital transformation enhance bank soundness? Evidence from Chinese commercial banks [J]. Journal of Financial Stability, 2025, 76: 101374. http://doi.org/10.1016/J.JFS.2025.101374.
Xuanli X., Shihui W. Digital transformation of commercial banks in China: Measurement, progress and impact [J]. China Economic Quarterly International, 2023, 3(1): 35–45. http://doi.org/10.1016/J.CEQI.2023.03.002.
Hasanul B., M. H. K., Mamunur R. Fintech-based financial inclusion and bank risk-taking: Evidence from OIC countries [J]. Journal of International Financial Markets, Institutions & Money, 2021, 75. http://doi.org/10.1016/J.INTFIN.2021.101447.
Wen W., Liang Y. Digital transformation and liquidity creation in commercial banks: Evidence from the Chinese banking industry [J]. PloS One, 2025, 20(2): e0318785. http://doi.org/10.1371/JOURNAL.PONE.0318785.
Xihui C., Xuyuan Y., Victor C. FinTech and commercial banks' performance in China: A leap forward or survival of the fittest? [J]. Technological Forecasting & Social Change, 2021, 166. http://doi.org/10.1016/J.TECHFORE.2021.120645.
Jiayi L., Shujun Y., Yujin Z. How digital finance promotes technological innovation: Evidence from China [J]. Finance Research Letters, 2023, 58(PA). http://doi.org/10.1016/J.FRL.2023.104298.
Sun Y., Zhang Q. Navigating the digital transformation of commercial banks: Embracing innovation in customer emotion analysis [J]. Journal of the Knowledge Economy, 2024, 16(1): 1–22. http://doi.org/10.1007/S13132-024-01938-5.
Jingjing Y. Stabilizing leverage, financial technology innovation, and commercial bank risks: Evidence from China [J]. Economic Modelling, 2024, 131: 106599. http://doi.org/10.1016/J.ECONMOD.2023.106599.
Yongjie Z. Enterprise lifecycle, financial technology and digital transformation of banks—Evidence from China [J]. Australian Economic Papers, 2023, 62(3): 486–500. http://doi.org/10.1111/1467-8454.12305.
Li C., Li Y., Xu Y., et al. Research on the impact of financial technology on risk-taking of commercial banks [J]. Research in International Business and Finance, 2025, 76: 102804. http://doi.org/10.1016/J.RIBAF.2025.102804.
Modesti P., Freitas L., Shotomiwa Q., et al. Security analysis of the open banking account and transaction API protocol [J]. Cyber Security and Applications, 2025, 3: 100097. http://doi.org/10.1016/J.CSA.2025.100097.
Chen M., Wang C. How business model innovation facilitates microcredit in balancing social mission with commercial performance—Evidence from local commercial banks [J]. Technological Forecasting & Social Change, 2024, 202: 123287. http://doi.org/10.1016/J.TECHFORE.2024.123287.
Teece D. J., Shuen P. A. Dynamic capabilities and strategic management [J]. Strategic Management Journal, 1997, 18(7): 509–533. http://doi.org/10.1002/(SICI)1097-0266(199708)18:7<509::AID-SMJ882>3.0.CO;2-Z.
Powell D. M. W. The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields [J]. American Sociological Review, 1983, 48(2): 147–160. http://doi.org/10.2307/2095101.
Kim H., Batten A. J., Ryu D. Financial crisis, bank diversification, and financial stability: OECD countries [J]. International Review of Economics and Finance, 2020, 65(C): 94–104. http://doi.org/10.1016/j.iref.2019.08.009.
Bozhen W. The development of investment banking industry and the application of supply chain finance in commercial bank credit business [J]. SHS Web of Conferences, 2025, 218: 01014. http://doi.org/10.1051/SHSCONF/202521801014.
Ranjan R. The response of financial technology corporation and central bank to the stock market revolution [J]. Journal of Global Economy, Business and Finance, 2023, 5(9). http://doi.org/10.53469/JGEBF.2023.05(09).02.
Jinwu Z., Xinmiao L., Changrui Y. How to integrate financial big data and FinTech in a real application in banks: A case of the modeling of asset allocation for products based on data [J]. Information, 2020, 11(10): 460. http://doi.org/10.3390/info11100460.
Sijie L. Challenges and countermeasures of banking risk management in digital transformation: Case study of state-owned commercial banks in China [J]. SHS Web of Conferences, 2024, 208. http://doi.org/10.1051/SHSCONF/202420801030.
Jiang Z. Open banking personal financial data governance: Framework, dilemmas and strategies [J]. Journal of Economics and Law, 2024, 1(3). http://doi.org/10.62517/JEL.202414314.
Zaal S. O. R., Jeurissen M. J. R., Groenland G. A. E. Organizational architecture, ethical culture, and perceived unethical behavior towards customers: Evidence from wholesale banking [J]. Journal of Business Ethics, 2019, 158(3): 825–848. http://doi.org/10.1007/s10551-017-3752-7.
Li W., Wei L., Guohua C., et al. Countermeasures of Chinese traditional commercial banks to meet the challenges of internet finance based on big data analysis—Evidence from ICBC [J]. Journal of Physics: Conference Series, 2020, 1648(3): 032066. http://doi.org/10.1088/1742-6596/1648/3/032066.
