Abstract: Fintech has produced far-reaching changes in the banking business model and has become the key for banks to break through the competition in the credit market. By making use of the data of banking fintech patents, the data of listed company borrowing, and the geographic information of commercial banks from 2013 to 2021, this paper systematically assesses the effect of fintech development on real banking competition and its mechanism. The findings show that banking fintech has significantly intensified the banking competition and expanded the diversified access for enterprises to get credit. The mechanism analysis shows that banking fintech has intensified the banking competition by expanding the lending distance between banks and enterprises, and this mechanism is more significant in areas with scarce financial resources, which helps to improve the fairness of financial services. The heterogeneity analysis shows that the positive effect of banking fintech on banking competition is more pronounced among firms with higher financing constraints, insufficient market attention, or leading digital transformation, which has effectively improved the allocation efficiency of credit resources. Further analysis reveals that the development of fintech can contribute to the improvement of the competitive environment of the credit market for different types of banks. Therefore, attention should be paid to the impact of the enabling effect of fintech on banking competition, and the development of banking fintech should be standardized and steadily promoted. At the same time, financial supervision should be strengthened to prevent disorderly competition, so as to continue to assist the high-quality development of enterprises.

Key words: banking fintech, lending distance, banking competition, credit diversification