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Retail Banks - China - January 2017

“Consumer experience now has a much broader definition than solely good customer service attitude. To be outstanding, retail banks need to differentiate on aspects like professionalism and efficiency. It is worth noticing that the benchmark used by consumers is their experience in different categories, so ensuring the performance is competitive across industries is critical.”

– Aaron Guo, Senior Analyst, China Report

This report looks at the following issues:

  • What are the key aspects retail banks should consider to differentiate?
  • How to attract affluent customers?
  • What would be the next generation of retail banks?

“Consumer experience now has a much broader definition than solely good customer service attitude. To be outstanding, retail banks need to differentiate on aspects like professionalism and efficiency. It is worth noticing that the benchmark used by consumers is their experience in different categories, so ensuring the performance is competitive across industries is critical.”

– Aaron Guo, Senior Analyst, China Report

This report looks at the following issues:

  • What are the key aspects retail banks should consider to differentiate?
  • How to attract affluent customers?
  • What would be the next generation of retail banks?

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
        • Definitions
          • Excluded
          • Executive Summary

              • The market
                • Figure 1: Best- and worst-case forecast of China retail bank market value, 2011-21
                • Figure 2: Interest income of retail banks and its proportion in the total revenue, 2011-16 (est)
              • Companies and brands
                • Figure 3: Retail banks’ market shares, 2016 (est)
                • Figure 4: Retail banking revenue proportion and YOY growth rate of leading banks, 2016 (est)
              • The consumer
                • Who are the main decision makers?
                  • Figure 5: Wealth management responsibility, by gender and age, November 2016
                • Which banks’ services are more widely used?
                  • Figure 6: Average bank accounts owned and top three banks, by account type, November 2016
                  • Figure 7: The most often used bank accounts, November 2016
                  • Figure 8: Overall satisfaction rates of banks, percentage of frequent users who rate ‘very satisfied’, November 2016
                • What are the key satisfaction influencing factors?
                  • Figure 9: Key drivers of overall satisfaction with Bank of China, November 2016
                • What kind of information can interest Chinese consumers?
                  • What are the wealth management preferences of Chinese consumers?
                    • Figure 10: Wealth management preferences, by MinTs and Non-MinTs, November 2016
                  • What we think
                  • Issues and Insights

                    • What are the key aspects retail banks should consider to differentiate?
                      • The facts
                        • The implications
                          • How to attract affluent customers?
                            • The facts
                              • The implications
                                • What would be the next generation of retail banks?
                                  • The facts
                                    • The implications
                                    • The Market – What You Need to Know

                                      • Retail banking market size to exceed RMB 3.5 trillion in 2021
                                        • Changing revenue structure of retail banks
                                          • Competition leads to efficiency
                                          • Market Size and Forecast

                                            • A RMB 2 trillion market in 2016
                                              • Figure 11: Best- and worst-case forecast of China retail bank market value, 2011-21
                                            • The revenue structure of retail banks is changing
                                                • Figure 12: Interest income of retail banks and its proportion in the total revenue, 2011-16 (est)
                                            • Market Factors

                                              • Increasing mortgages
                                                • Figure 13: Year-end outstanding mortgages and growth rate, 2011-16 (est)
                                              • Better controlled interest-rate spread
                                                • Figure 14: One-year base loans and savings rates and interest-rate spread, 2010-16
                                              • Threats from internet finance sector
                                                • Changing wealth management attitudes of consumers
                                                • Key Players – What You Need to Know

                                                  • The Big Four are losing share to other commercial banks
                                                    • Competing at different stages
                                                      • Technology as the key innovation power of retail banks
                                                      • Market Share

                                                        • More than half of the market in hands of the top ten
                                                          • Figure 15: Retail banks’ market shares, 2016 (est)
                                                        • BOC has the best performance among the Big Four
                                                            • Figure 16: Changes of leading retail banks in market share, in percentage points, 2015-16 (est)
                                                          • Retail banking business at different development stages
                                                            • Figure 17: Retail banking revenue proportion and YOY growth rate of leading banks, 2016 (est)
                                                        • Competitive Strategies

                                                          • Targeting young adults
                                                            • Figure 18: The Palace Museum themed luggage tags introduced by CMB and Gugong Taobao
                                                          • Valuing overseas market
                                                            • Developing together with rural areas
                                                              • Figure 19: An opening ceremony of a PSBC branch in Baqing County, Tibet
                                                            • Screening high-end customers
                                                              • Figure 20: Credit card series introduced by HSBC, ‘Living Platinum’, ‘Traveling Platinum’ and ‘Premier Investment’, 2016
                                                          • Who’s Innovating?

                                                            • Leveraging the power of big data in credit verification
                                                              • Device-centred community branches
                                                                • Figure 21: A self-serving terminal in one ICBC branch
                                                              • Extended opening time
                                                                • Figure 22: Night of Finance’ event by one ICBC Shanghai branch
                                                              • AI-assisted banking service
                                                              • The Consumer – What You Need to Know

                                                                • Females take more responsibilities in household wealth management
                                                                  • Investment account ownership is under cultivation
                                                                    • BOC enjoys the top satisfaction rate
                                                                      • Affluent consumers are more confident in investment with a broader vision
                                                                      • Wealth Management Responsibility

                                                                        • Females taking more wealth management responsibilities
                                                                          • Figure 23: Wealth management responsibility, by gender and age, November 2016
                                                                        • Full-time employees and high earners take more wealth management responsibility
                                                                          • Figure 24: Wealth management responsibility, by income, working status and company type, November 2016
                                                                        • More of a family decision in North and Mid-west regions
                                                                            • Figure 25: Wealth management responsibility, by city tiers and regions, November 2016
                                                                        • Types of Bank Accounts Owned

                                                                          • Consumers have savings accounts in more than three banks
                                                                            • CMB and BOC are more successful at targeting affluent consumers
                                                                              • Figure 26: Types of bank accounts owned, savings account/debit card, November 2016
                                                                            • Consumers have loan accounts in two banks on average
                                                                              • Young consumers prefer CMB for loans
                                                                                • Figure 27: Types of bank accounts owned, loan account/credit card, November 2016
                                                                              • One in four consumers does not have any investment account yet
                                                                                  • Figure 28: Types of bank accounts owned, investment account, November 2016
                                                                                • Joint-equity commercial bank investment account holders are more likely to switch
                                                                                  • Figure 29: Ownership of investment accounts, by savings account/debit card ownership, November 2016
                                                                              • Most Used Bank Accounts

                                                                                • ICBC and CCB are the most welcomed banks
                                                                                  • Figure 30: The most often used bank accounts, November 2016
                                                                                • High usage frequency requires a balanced performance
                                                                                  • Figure 31: The most often used bank accounts, by accounts type, November 2016
                                                                              • Satisfaction Influencing Factors

                                                                                • Penetration does not speak for satisfaction
                                                                                  • Figure 32: Overall satisfaction rates of banks, November 2016
                                                                                • Common unsatisfactory factors of retail banks
                                                                                  • Professionalism leads to perfection
                                                                                    • Figure 33: Key drivers of overall satisfaction with Bank of China, November 2016
                                                                                  • Transaction efficiency should be improved
                                                                                    • Figure 34: Key drivers of overall satisfaction with Agricultural Bank of China, November 2016
                                                                                  • CMB stands out in online banking
                                                                                      • Figure 35: Key drivers of overall satisfaction with China Merchants Bank, November 2016
                                                                                  • Interested Information

                                                                                    • Investors prefer practical information
                                                                                      • Affluent consumers have a wider range of needs
                                                                                        • Figure 36: Interested information, November 2016
                                                                                      • Rising attention on wealth inheritance service
                                                                                        • Males and females have different emphasises
                                                                                        • Interested Mobile Banking Services

                                                                                          • Diversified needs of different consumer groups
                                                                                              • Figure 37: Interest in mobile banking services, November 2016
                                                                                            • The linkages between different mobile banking services
                                                                                            • Wealth Management Preference

                                                                                              • The majority are risk-averse investors
                                                                                                • Figure 38: risk management preference, November 2016
                                                                                              • Lack of trust in financial advisors
                                                                                                • Figure 39: Investment product selection criteria, November 2016
                                                                                                • Figure 40: The most often used investment accounts, by preference on advisors, November 2016
                                                                                              • Internet financial institutions are gaining ground
                                                                                                • Figure 41: Investment channels preference, November 2016
                                                                                              • Investors with higher education still value the professionalism of banks
                                                                                                • Figure 42: Investment channels preference, by risk management preference and preference on advisors, November 2016
                                                                                              • Most people prefer not ‘putting all their eggs in one basket’
                                                                                                • Figure 43: Investment diversification preference, November 2016
                                                                                            • Meet the Mintropolitans

                                                                                              • MinTs takes up more wealth management responsibly
                                                                                                • Figure 44: Wealth management responsibility, by MinTs and Non-MinTs, November 2016
                                                                                              • BOC’s overseas services make it more popular among MinTs
                                                                                                • Figure 45: Differences between MinTs and Non-MinTs in account ownerships and usage frequencies of banks, November 2016
                                                                                              • MinTs have broader investment vision, especially overseas investments and high-end medical insurance
                                                                                                • Figure 46: Interested information, MinTs versus Non-MinTs, November 2016
                                                                                              • MinTs show more confidence in investment
                                                                                                • Figure 47: Wealth management preferences, by MinTs and Non-MinTs, November 2016
                                                                                            • Appendix – Market Size and Forecast

                                                                                                • Figure 48: Market value of retail banks and forecast, 2011-21
                                                                                            • Appendix – Methodology and Abbreviations

                                                                                              • Methodology
                                                                                                • Key driver analysis methodology
                                                                                                  • Key driver analysis results
                                                                                                    • Figure 49: Key drivers of overall satisfaction with Bank of Communications, November 2016
                                                                                                    • Figure 50: Key drivers of overall satisfaction with Industrial and Commercial Bank of China, November 2016
                                                                                                    • Figure 51: Key drivers of overall satisfaction with China Construction Bank, November 2016
                                                                                                  • Fan chart forecast
                                                                                                    • Abbreviations

                                                                                                    Companies Covered

                                                                                                    To learn more about the companies covered in this report please contact us.

                                                                                                    Retail Banks - China - January 2017

                                                                                                    £3,170.69 (Excl.Tax)