Impact of the Internet on the Chinese Financial Industry

by Hua Zhang, February 24, 2014
Industry Trends

Abstract

Some banks in China see their greatest competitors not as traditional financial institutions, but modern Internet-based firms such as Tencent and Alibaba. Once deregulation occurs, these firms will race to control the market, resulting in an irreversible and disruptive impact on traditional financial institutions.

Banks’ traditional core businesses are payments, deposits, and loans. As Internet-based firms gain market share, a number of changes will occur. The payments business, which includes mobile and internet payments, will be the first impacted by Internet-based firms. In the report Impact of the Internet on the Chinese Financial Industry, Celent examines the Internet’s impact on Chinese banking, as well as both Internet firms’ strategies and banks’ strategies in adjusting to this changing environment.

“Future banking models in China will include zero-distance banking, smart banking, and universal banking,” says Hua Zhang, Analyst with Celent’s Asian Financial Services Group and author of the report. “Already, Internet-based firms are able to offer a better customer experience and services in some ways than their traditional counterparts.”

This report provides an overview of the Internet’s impact on China’s banking industry, including discussion of the implications for payments, Big Data, and social media strategies for both Internet firms and banks.

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

Impact of the Internet on the Finance Industry’s Business Models

2

 

Third Party Payments

2

 

The Internet Channel

2

 

Use of Big Data

3

 

Resource Allocation

3

 

Bringing in the Long Tail Market

4

 

Social Network Financing

4

Financial Strategies of Internet Companies

5

 

Alibaba Financial

5

 

Supply Chain Financing of DHGate and 315

6

Internet Strategies of the Banking Industry

8

 

Online Direct Banking; China Minsheng Bank and Bank of Beijing

8

 

Ping An Bank’s Road to E-Commerce

9

 

Shanrong Commerce of China Construction Bank

11

 

E-Mall Bocom of Bank of Communications

12

 

Online Revolving Loan of ICBC

14

 

Platform Financing of Huaxia Bank

14

 

Banks Are Launching Offline Community Banks

14

Conclusion

16

Leveraging Celent’s Expertise

17

 

Support for Financial Institutions

17

 

Support for Vendors

17

Related Celent Research

18

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