"The next five years will be a critical transition period for China's consumer finance market. Banks, licensed consumer funds, financial technology companies and other institutions have entered the market one after another, which will reshape the market pattern under the environment of reduced profits and intensified competition." Qu Xiangjun, McKinsey's global senior managing partner, said.
McKinsey reported on May 20 that China's consumer financial market will continue to maintain steady development, and the market scale is expected to increase to about 28 trillion yuan by the end of 2025. Meanwhile, McKinsey believes that the consumer financial market will usher in a "triple upgrade" at the stock business end, the new model end and the capital market end.
Ji Xiang, a global managing partner of McKinsey, said bluntly that the so-called "lying win" era in the past no longer exists. Consumer finance "players" with more resource endowments or long-term accumulation of capabilities will surface, "two-level differentiation is inevitable".
differentiated gold consumption industry: head institutions rush
Over the past year, the consumer finance industry has faced double pressure. On the one hand, interest rate drop, stricter supervision and prominent external environmental risks; On the other hand, internal competition intensifies, resulting in "internal pressure".
On this basis, licensed consumer finance companies still achieved good growth. According to the statistics of Chinese reporters of securities companies, the total net profit of 20 consumer gold companies with comparable data exceeded 11 billion yuan, a year-on-year increase of more than 80%.
Among them, the head consumer finance company represented by Zhaolian consumer finance, Societe Generale consumer finance, instant consumer finance and BOC consumer finance showed rapid growth in both asset scale and profit indicators, further got rid of the waist and tail companies, and contributed most of the profit increment of the whole industry.
Taking Zhaolian consumer finance as an example, last year, the company achieved an operating revenue of nearly 16 billion yuan and a net profit of more than 3 billion yuan, with a year-on-year increase of 24.3% and 83.6% respectively. At the end of the year, the asset scale was nearly 150 billion yuan. It is the only 100 billion level consumer finance company.
Followed by industrial consumer finance and immediate consumer finance, the scale of financial assets is more than 60 billion yuan. Last year, the two companies achieved operating revenue of 8.41 billion yuan and 10.01 billion yuan respectively, with a year-on-year increase of about 30%; The net profit was 2.23 billion yuan and 1.38 billion yuan respectively, with a year-on-year increase of 65% and 94% respectively.
It is worth noting that a number of head consumer finance companies intend to sprint into the capital market. Among them, immediate consumer finance completed the listing guidance and filing in Chongqing Securities Regulatory Bureau at the beginning of last year; CMB passed a resolution of the board of directors in March last year and agreed to start the research on the listing of CMB consumer finance Industrial Bank Co.Ltd(601166) made it clear at the work meeting at the beginning of the year that it is necessary to promote the introduction of strategic investors into Societe Generale consumer funds.
Looking forward to the next stage, McKinsey believes that China's consumer financial market will maintain steady development, and the market scale is expected to increase to about 28 trillion yuan by the end of 2025.
"We expect that China's consumer financial market will still rise steadily, but the market growth logic will change structurally, and the competition and cooperation pattern will change accordingly. The 'small B' market represented by personal business loans will become a potential opportunity for consumer financial institutions to explore the medium and long term." Said Zhong Huixin, global managing partner of McKinsey.
How to break through
consumer finance market is not short of new entrants
According to statistics, in 2020 alone, five consumer finance companies were approved for preparation. Since last year, although no new licensed institution has been approved, two Toutou city commercial banks Bank Of Ningbo Co.Ltd(002142) , Bank Of Nanjing Co.Ltd(601009) have successively won the gold consumption license.
Among them, Bank Of Ningbo Co.Ltd(002142) spent 1.091 billion yuan to win 70% equity of Huarong Xiaojin held by China Huarong, and 6.7% equity held by Xin'an assets is also expected to be transferred to Bank Of Ningbo Co.Ltd(002142) Bank Of Nanjing Co.Ltd(601009) spent 388 million yuan to acquire the equity of Suning consumer finance, increasing the bank's shareholding in Suning consumer finance from 15% to 56%.
The two city commercial banks are also full of expectations for this gold consumption license. It is understood that the registered place of Huarong Xiaojin will be moved to Ningbo, and it is proposed to change its name to ningyin Xiaojin. Zhou Jun, general manager of Bank Of Ningbo Co.Ltd(002142) remote banking department, will serve as the chairman of the company.
Bank Of Nanjing Co.Ltd(601009) Chairman Hu Shengrong said when talking about Suning Xiaojin's equity acquisition at the bank's annual performance meeting that the overall progress is relatively smooth, and the delivery is currently waiting for regulatory approval. Hu Shengrong revealed that the bank will study how to increase the share capital of Suning Xiaojin in due time, and make a series of arrangements for Suning Xiaojin's business model, business development planning and internal institutions, so as to further release the bank's consumer finance business advantages. "The main task this year is to stabilize, do a good job in the basic work, and achieve relatively large development next year".
It is undeniable that the profit margin of consumer finance companies has been further squeezed under the background of the decline of overall interest rate and the rise of labor cost and credit investigation cost. As Ji Xiang, the global managing partner of McKinsey, said, the so-called era of "lying and winning" in the past no longer exists. The "players" with more resource endowments or long-term accumulation of abilities will surface, "two-level differentiation is inevitable".
at this time, how can new entrants seize the market and break through? Jixiang believes that for the new consumer finance company:
On the one hand, institutions with banking or Internet platform background need to dig deep into their own competitive advantages and "survive in the market";
On the other hand, "players" without their own advantages should cultivate their internal skills, precipitate their abilities of customer acquisition, customer management, online operation, risk control, collection and so on, "do the right and difficult things to achieve from small to large".
the gold consumption market will meet the "triple upgrade" in the next five years
McKinsey believes that China's consumer financial market is in a transition window and will usher in "triple upgrading" at the stock business side, the new model side and the capital market side in the next five years. Specifically:
From the perspective of stock business, with the decline of interest rate and the rise of both parts, consumer finance enterprises need to strengthen their lean operation ability. The "two low battlefields" of low interest rate / low parts and the "one high battlefields" of high parts and business loans will become the two core battlefields for strategists.
From the perspective of the new model, the market will usher in the reconstruction of business model and the re layout of business pattern, and "all-round", "multi boutique" and "expert" players will emerge in the consumer finance value chain.
From the perspective of capital market, it is reflected in the upgrading of valuation logic. For example, some gold consumers have transformed from technology spillovers and commercialized technology enterprises to a new model of separating financial and technology businesses, and there is also room for upward valuation.
McKinsey report points out that for the consumer finance industry, we can promote the transformation of consumer finance business based on the three themes of intensive cultivation, widening the track and cultivating internal skills, and seize the growth opportunity of overtaking in corners. Including:
In order to balance the growth of scale and the improvement of profitability, it is suggested that the financial institutions "intensive cultivation". First of all, on the basis of customer stratification and clustering, refine the management of stock customers and improve the production ratio; Secondly, new customer models such as water test scene innovation; Third, integrate the optimization of production and resource allocation into the overall operation of the company; Fourth, build an intelligent risk management system; Finally, use case driven data governance can fully release the value of data to the business.
In order to explore new growth engines, it is suggested that consumer finance institutions "make a wide track" to incubate potential new growth points in the future in an environment of exhausted traffic, stricter supervision and fierce competition. Based on the observation of the market, McKinsey believes that small B finance and technology output are two common exploration fields, of which the latter is mainly applicable to technology leading industries.
In order to build a supporting system for sustainable development, it is suggested that financial institutions "cultivate internal skills": on the one hand, improve organizational health, focus on strengthening efficiency and talent management, so as to cope with the new competition pattern; On the other hand, ESG concept runs through the business essence and enterprise strategy.
