Abstract: Under the background of increasingly severe prevention and control of systemic financial risks, in order to promote the digital transformation process of commercial banks and prevent the outbreak of systemic financial risks, it is of great importance to analyze the relationship between fintech and the vulnerability of banks and to examine whether the fintech can integrate perfectly with commercial banks. This paper makes use of the data of banks and cities from 2012 to 2020 to analyze the impact of external fintech and internal digital transformation of banks on the vulnerability of banks from both the internal and external perspectives. The findings show that exogenous fintech and bank internal digital transformation can significantly reduce the bank vulnerability mainly through improving the deposit and loan structure and the credit quality of banks. The degree of reduction in the vulnerability of rural commercial banks is significantly higher than that of urban commercial banks, and the exogenous fintech can promote bank internal digital transformation through the technology spillover effect. It is further found that the exogenous fintech can reduce the systemic risks of banks, but the marginal effect gradually weakens. And in the early stage of the development of the internal digital transformation of banks, there was no significant inhibitory effect on the systemic risks of banks. With the continuous advancement of the internal digital transformation of banks, its inhibitory effect on the systemic risks of banks gradually emerged and showed an enhanced marginal effect. Therefore, banks should rationally plan the fintech development strategy, fully grasp the opportunities of digital transformation, and guide the benign development of fintech.

Key words: exogenous fintech, bank internal digital transformation, bank vulnerability, bank systemic risk