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

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

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5 January 2015
Hua Zhang

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:

  • Developing P2P lending services
  • Leveraging big data-based technologies
  • Developing products specifically tailored to direct banking
  • Launching 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.

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