["Business Strategy and the Environment, EarlyView. ", "\nABSTRACT\nFinancial capital is widely recognized as having the potential to provide investments needed for net‐zero transitions. While recent empirical studies reveal that financial digitalization and fintech have changed Chinese banks' loan portfolios and business models, they stem from credit restrictions on heavily polluting enterprises and from Chinese manufacturers' dominance in decarbonization technologies. To address this research gap, this study investigates on‐the‐ground mechanisms between green and renewable loans, digitalization, and banks' sustainable business model innovations (SBMIs) by statistical analysis and multiple case studies with heterogeneous tests. The results reveal that green loans have triggered SBMIs in a few regional banks. Regional banks have reoptimized their loan portfolios to attain the green finance targets. Only those who reframed wind power finance as enhancing local industrial chains have actively advanced SBMIs. This finding suggests that the government sustainability disclosure requirement, digitalization in financial and electricity systems, and the co‐evolution of financial institutions are enabling factors.\n"]