China’s Banking Market Slows

A significant number of Chinese consumers are enjoying upper class incomes equal to those found in wealthy households in America or Europe. That means tens of millions of additional Chinese are purchasing imported food brands, driving luxury automobiles, buying jewelry from Tiffany and Cartier and wearing designer clothes. China is a ripe market for a broad array of financial outlets, products and services, from credit cards to insurance to mortgages and personal loans.

Many banks in China are offering mortgages, automobile loans, credit cards and other kinds of modern financial products. The government’s official policy is to boost household spending, and modern lending will be required to meet this goal. Mortgages have been available only since the late 1990s.

In October 2014, the Chinese State Council announced that qualified domestic and foreign credit card companies may apply to create bank card clearing operations in China, effectively opening the country to foreign credit card firms.

Online banking via smartphone is a regular practice in China. Financial-technology companies such as Ant Financial Services Group and Tencent Holdings are working hard to tap this enormous market. Ant’s Alipay phone app has more than 1 billion users. With the app, shoppers call up a QR code on their phones for retailers to scan (similar to Apple Pay) for payment. Users can also send money to other users. In addition, Alipay offers investment services through its online only bank called MyBank. Tencent, the company behind China’s wildly popular WeChat messaging system, has a similar online only bank called WeBank. Although online banking is convenient, it is susceptible to fraud, and the Chinese government is taking steps to regulate payment platforms and set limits on online lending.

SPOTLIGHT: Industrial & Commercial Bank of China

Industrial and Commercial Bank of China Ltd. (ICBC) is a leading bank in China, with global locations including Asia, Europe, the UAE, the U.K., the U.S. and Australia. ICBC provides financial service in renminbi and foreign currencies to wholesale, retail, ecommerce and international businesses. ICBC offers corporate banking and personal banking. Corporate banking offers loans, trade financing, deposit services, eBanking/mobile banking, bank cards and corporate wealth management services to corporations, financial institutions and government agencies.

Personal banking involves services to individual clients including personal loans, deposits, eBanking/mobile banking, wealth management and card services. Products and services include wealth management to the public, investment and management services to property investors, private placement of wealth management products to investors, and related financial advisory and consulting services. ICBC operates 15,639 outlets. As of 2022, the firm had 10,693 corporate and 720 million personal customers as well as 516 million personal mobile banking customers.

SPOTLIGHT: Ant Group

Ant Group Co., Ltd. is the financial services affiliate of Alibaba Group Holding Limited, and its products and services are widely used throughout China. Via technological innovation, Ant Group enables its partners to offer digital financial services for consumers and small and micro-sized businesses. Ant Group’s technology products and services support the digital transformation of businesses and facilitate digital collaboration across industries and geographies. Ant Group offers its digital financial services through several brands, including Alipay, Yu’e Bao, Huabei, MYbank, and Zhima Credit. Launched in 2004, Alipay is the company’s digital payment platform, serving hundreds of millions of users. Yu’e Bao is an online spare cash management platform within the Alipay app. When money is transferred to the Alipay user, Yu’e Bao puts allotted money into a money market fund managed by a partner asset management company, generating returns for users. Users can also access the Yu’e Bao funds to make online and offline purchases. Huabei is a consumer credit platform that enables users to buy now, pay later (BNPL). Users have up to 40 days of delayed repayment free of charge and are set up with a 12-month installment repayment structure. Huabei also offers loans in small amounts to individual users. MYbank is a private online bank in China with no physical branches at all. MYbank serves small and micro-businesses, and enables them to apply for loans, and receive the funding (if approved) entirely through the digital platform. Zhima Credit is a private and independent credit assessment service built for commercial use. Those with high credit scores have the benefit of waiving required deposits for varying daily purposes such as renting a bike or staying at a hotel. Headquartered in China, Ant Group has international offices in Asia, Europe, the U.S. and Oceania.

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