Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

China's banks need to offer more digital solutions to customers

Albert Chan | Aug. 4, 2014
Growth in recent years has been solid, but digital disruptors are poised to take market share unless China's banks offer more day-to-day digital solutions.

By any standard, the statistics of China's growth in recent years are staggering and impressive. For example, household core deposits and loan portfolios have grown by 16 percent from RMB23.9 trillion (US$3.9 trillion) in 2011 to RMB35.5 trillion (US$5.79 trillion) in 2014. There has been a 19 percent increase in new personal bank account openings during the same period. And there have been 1.8 billion new bank cards issued (including 161 million credit cards), amounting to an annual growth rate of 20 percent, according to the People's Bank of China and Accenture analysis.

However, banks cannot afford to rest on their laurels. Despite the significant growth in household portfolios, branch density remains low. This gives banks less opportunity for face-to-face conversations with customers-making it harder for banks to understand customers' changing needs.

But in a world of increasing online interaction, there are other solutions to this problem: offering truly value-enhancing digital service. We are seeing shareholder value shift to the banks that are further along their digital transformation journey. That is to say the banks that not only have stronger mobile and digital platforms themselves, but also those that are working seamlessly with business partners to offer more diverse mobile and digital services to customers. These organisations are best positioned to redefine markets with digital propositions, change the way customers interact with them, and confront competition from digital disrupters such as Tencent and Alibaba, which already have banking licences.

According to data from the China Internet Network Information Center, internet penetration in China reached 45.8 percent (or 618 million users) as of the end of 2013. More than 40 percent of these users now access online/mobile bank-related services. Recent data from People's Bank of China revealed that total e-banking payments in China have been growing at almost 30 percent during 2013, with mobile payments growing at more than 200 percent during the same period.

Are China's banks doing enough to compete for online/mobile customers? We believe not. Compared with leading banks worldwide, there's a widening gap between Chinese banks and their more digitalized global counterparts. One of the key metrics used in the Accenture Banking Digital Index is the website traffic ranking (measured on a daily basis by Alexa, an Amazon company). When comparing banks internationally against all websites accessed in their home market, Malaysia's Maybank was ranked highest (8th), with South Africa's First Rand a close second (10th). In 85th place, China Construction Bank is the highest ranked mainland Chinese bank (Baidu, QQ and Taobao are the top-three most visited sites in China). This suggests China's banks could invigorate their websites to attract more traffic-but in order to do that they need to be offering services that customers want on those sites.

 

1  2  Next Page 

Sign up for CIO Asia eNewsletters.