China’s Direct Banks: Birth of a New Banking Sector

by Hua Zhang, January 5, 2015
Industry Trends
Asia-Pacific

Abstract

Celent estimates that there are more than 30 million potential customers for direct banking in China, and this number will surpass 60 million by 2020. Direct banks will take more than 10% market share of the retail banking industry by 2020.

Although many banks in China have set up direct banks, their models are not all the same. China Minsheng Bank aims to become a completely independent direct bank, and has adopted a purely online model, with a strategic goal of servicing long-tail markets such as low-end retail customers and micro and small enterprises. On the other hand, the Bank of Beijing has borrowed the experiences of ING Direct by adopting an online and offline model, with a core strategic goal of attracting deposits at low costs.

Major trends in China’s direct banking market include:

  • ŸDeveloping P2P lending services
  • Leveraging big data-based technologies
  • ŸDeveloping products specifically tailored to direct banking
  • ŸLaunching e-commerce platforms.

In the report China’s Direct Banks: Birth of a New Banking Sector, Celent examines the size of the market, market trends, direct banking business models, and competitive strategies.

“Celent recommends the following with regard to developing direct banks in China,” says Hua Zhang, analyst with Celent’s Asian Financial Services Group and author of the report. “Cooperate with large e-businesses, fully utilize the resources of the parent bank, differentiate their positioning, and develop offline channels.”

This report provides an overview of the direct banking market in China, including discussion of direct banking market size, market trends, direct banking business models, and strategies.

A Chinese version of the report is also available.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

The Direct Banking Market in China

2

 

Direct Banking Business Model

3

 

Market Size

4

China’s Direct Banks

5

 

China Minsheng Bank’s Direct Bank

5

 

Alibaba and Direct Banking

9

 

Direct Bank of the Bank of Beijing

11

 

Other Direct Banks

13

Drivers and Challenges

14

Development Trends

16

Conclusion

17

Leveraging Celent’s Expertise

19

 

Support for Financial Institutions

19

 

Support for Vendors

19

Related Celent Research

20

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