Abstract: Whether fintech can promote effective competition in the traditional banking industry is of great significance for the financial industry to better serve the real economy. This paper conducts an empirical study with the data of 290 cities from 2011 to 2020. The findings show that Fintech leads to the exit of the outlets from the market through the competition effect and the empowerment effect, while inhibiting the entry of the outlets. In terms of banking heterogeneity, the resource allocation effect of fintech makes theexit of the large commercial bankoutlets in a larger scale, while the technology empowerment effect of fintech makes the exit of the listed bankoutlets ina larger scale. In terms of inter-city heterogeneity, in the cities with higher levels of economic development, lower population aging, stronger education levels and smaller loan-to-deposit ratios, the outlets are more impacted by fintech and the exit of the outlets are more significant. In terms of the impacting channels, fintech reduces households’ bank savings, optimizes household asset allocation, and leads to the exit of the inefficient outlets. Further study reveals that fintech reduces the concentration of banking market and optimizes the competition pattern of the financial industry by affecting the entry and exit behaviors of bank outlets. At the same time, fintech also compensates for the negative impact of the exit of outlets on the regional financial lending.

Key words: fintech, bank outlets, market structure, resource allocation