Transforming China's banking experience (Landor Perspectives 2011)

Liang Tan

China is developing rapidly. Awareness of new opportunities is increasing, living standards are improving, and attitudes toward personal credit and financial management are changing. The retail banking business has become a potentially high profit industry; China's 1.3 billion citizens routinely bank more than a quarter of their income and hold nearly US$2 trillion in savings combined. As China revises its conservative banking system, numerous opportunities for both foreign and domestic banks arise. It is estimated that 30 percent of future growth and profitability for banks in China will come from retail banking and from small business and fee-based lending.

Traditionally, China's banks were process focused, but to succeed today they must concentrate more on customers' needs. China's sizable and growing middle class is an obvious target market for retail banks. This group has long been held captive by state-owned banks that didn't invest in wooing them, earned virtually nothing on their deposits, had minimal access to personal loans or lines of credit, and where they endured long lines to access this poor service. Now they are jaded and difficult to please; banks that partner with China's restless consumers will be profitable.