Under the tide of digital transformation of banking industry, private banks began to “break their wrists”. Recently, two private banks have announced that they will suspend cash collection and payment business, including counter cash deposit and withdrawal, and have reported to the relevant regulatory authorities. According to the announcement, the reasons for the suspension given by the two banks are related to the digital transformation.
In the view of insiders, this is a change move of private banks under the background of limited exhibition in other places. Over the past period of time, the regulator has repeatedly stressed that the management of deposits on Internet platforms and deposits in other places should be strengthened, and local banks should not expand their business across regions. In this context, private banks are accelerating their transformation. One of the major directions is to increase investment in online business and move closer to Internet banking in order to achieve national exhibition.
Senior practitioners also mentioned that in the future, the differences in the types of business operated by private banks will continue to increase, and various institutions tend to work intensively, that is, focus on serving a specific segment.
two banks close cash business
New changes have taken place in private banking business. At the end of January, Bank of Beijing Beijing Centergate Technologies (Holding) Co.Ltd(000931) announced that after reporting to the relevant regulatory authorities, the bank would suspend the cash collection and payment business from April 1, 2022, including the counter of business outlets and the ATM self-service channel of the bank.
The bank said that after the suspension of cash collection and payment business, customers can handle various businesses other than cash collection and payment through the bank’s mobile app and business outlets; If cash service is really needed, the customer can transfer to another bank through this bank, and the transfer fee is exempted.
Not long ago, Liaoning Zhenxing bank also announced the suspension of counter and ATM cash business, saying that with the approval of the competent people’s Bank of China, the bank will suspend cash business such as counter cash deposit and withdrawal, change exchange, damaged currency exchange and self-service equipment deposit and withdrawal from March 1, 2022.
Liaoning Zhenxing bank also said that if customers hold the bank’s debit card, they can continue to handle cash withdrawal business at ATMs of other banks with “UnionPay” logo, or handle fund transfer business through mobile banking, wechat banking and other channels of the bank.
According to the announcement, the main reason for the suspension of cash business by the above two banks is to strengthen the development of online business. For example, Bank of Beijing Beijing Centergate Technologies (Holding) Co.Ltd(000931) mentioned that “with the bank accelerating the pace of digital transformation and increasing the development of online business, in order to provide customers with more convenient and efficient financial services”, the bank will continue to improve its comprehensive financial service capacity and operation capacity in the future. “Liaoning Zhenxing bank” is also known as “concentrating resources to improve the service capacity of e-banking and provide customers with better financial services.
Although many users are puzzled about the bank’s suspension of cash business, it is not surprising to people in the industry. On the one hand, affected by its positioning of “one bank, one store”, private banks themselves rarely set up outlets and usually rely on the Internet to achieve business growth; On the other hand, the suspension of cash business can save offline business costs to a certain extent, concentrate resources and improve digital service capacity.
According to the statistical data of Bank Of China Limited(601988) Industry Association, by 2020, the number of off counter transactions of financial institutions in Bank Of China Limited(601988) industry had reached 370.872 billion, a year-on-year increase of 14.59%, and the average diversion rate of electronic channels in the industry was 90.88%. Among them, mobile banking transactions reached 191.946 billion, a year-on-year increase of 58.04%. It can be seen that the increasing popularity of mobile payment in China and the improvement of digital service capacity of banks will help to expand business coverage.
There is also a point of view analysis that the above two banks will suspend their offline cash business or pave the way for their transformation into Internet banking. This is because at present, private banks are mainly divided into two categories, namely Internet private banks and other private banks. The former can develop the industry nationwide, while the latter is managed according to general local banks and is subject to strong policy constraints. Therefore, the transformation of Internet banking may get more exhibition opportunities.
improve digital construction capacity
The reporter learned that under the background of intensive regulatory policies, many private banks want to transform into Internet banks. This is mainly due to the fact that in recent years, the supervision has been increasingly strict on the management of banks’ off-site exhibition industry, while private banks without Internet qualification are supervised according to regional banks. Therefore, online business has become the focus of many private banks.
For example, Article 9 of the Interim Measures for the administration of Internet loans of commercial banks issued in July 2020 stipulates that local corporate banks should mainly serve local customers, prudently carry out cross registered business, and effectively identify and monitor the development of cross registered business. There are no physical business outlets, and the business is mainly carried out online, except those that meet other requirements of Bank Of China Limited(601988) Insurance Regulatory Commission.
Article 11 of the notice on regulating commercial banks to carry out personal deposit business through the Internet issued in January 2021 stipulates that local legal person commercial banks should adhere to the development orientation and ensure that the deposit business carried out through the Internet is based on serving customers in the region where the established institution is located. There are no physical business outlets, except those whose businesses are mainly carried out online and meet the conditions stipulated by the CBRC.
In this context, most private banks have limited offline business growth, prefer the “asset light” mode of Internet banking, and continuously improve their digital construction capacity. Yang Xinjun, President of Beijing Beijing Centergate Technologies (Holding) Co.Ltd(000931) bank, previously said when talking about the bank’s digital transformation that if private banks want to develop and win customers, they can only serve customers through products and experience by increasing investment in science and technology and borrowing resources such as external cooperation.
Yang Xinjun also said that after years of exploration, the positioning of private banks is becoming clear, which is to transform to small and micro enterprises and retail, increase investment in science and technology and create an online operation mode. At present, the proportion of online business of private banks is increasing significantly. It is understood that the online business of Bank of Beijing Beijing Centergate Technologies (Holding) Co.Ltd(000931) accounts for more than 60%.
In addition to improving the online construction capacity, insiders mentioned that the development of private banks will be further differentiated in the future. A senior banking practitioner told reporters that the development of private banks will continue to show obvious differentiation characteristics. Some banks will continue to follow their comparative advantages, rely on shareholders’ resources and capabilities, take financial technology as the starting point, continue to explore the development model of Internet banking and become the leader of the local market.
Dong ximiao, a part-time researcher at the Institute of finance of Fudan University, also said that in the future, there will be greater differences in the types of business of private banks, and more and more private banks will focus on a certain segment, which will be determined by the market and the banks themselves.
