Banking on Asia
Banks across Asia are undergoing a profound transformation—cultural as well as operational—in an effort to capitalize on the region’s growth.
In this article
Ten years ago, going to the bank was an unpleasant chore for Dr. Wanzhen Xie. Her bank had only a few offices for citizens in her home city of Guangzhou, China. She had to wait in a long line to transact her business. When she finally reached the teller window, the staff treated her indifferently. The concept of bank service was foreign in an economy that, in spite of incipient reform, was still state controlled. Yet the doctor had little choice. China’s fledgling investment markets were too risky for the average saver. The banks were otherwise the only place a consumer could earn a reasonable rate of return.
Today, China’s banking landscape has changed in ways that are nothing short of astonishing to Wanzhen’s generation. Convenient bank branches seem to have sprung up all over Guangzhou. Instead of waiting in line, she can take a number and sit comfortably until she’s called. While waiting, she can watch the wide-screen televisions touting new products like mutual funds and CDs—at rates that have become more favorable since banks actually began competing for customers. The clerks are solicitous and eager to answer questions about their products and services. Of course, Wanzhen Xie doesn’t have to go to the bank as often anymore. Her monthly bills are paid automatically.
Meanwhile, her son, Hongyi Gao, hardly ever sets foot in a branch. A year ago, he began banking online and signed up for a service that sends him his balances and recent activity by phone. He has accounts at three different banks in order to take advantage of different services. He also has something virtually unheard of in China ten years ago—a credit card. Unlike their elders, the younger generation of urban Chinese is less and less averse to borrowing. Hongyi’s dual currency card enables him to charge purchases on credit when he travels to Hong Kong or Macau as well as much of the mainland.
Source: Merrill Lynch
CASH IS KING: Penetration of credit cards in China remains low. Most Chinese have a debit or cash card in their wallets, but only 40 million credit cards have been issued in a country of 1.3 billion people.
While all this may sound fairly standard to Americans, it is revolutionary in China, and symbolic of the profound changes sweeping through banking systems throughout Asia. The same forces that are driving the region’s economic growth—market deregulation, rising consumer prosperity and technological advancement—are reshaping Asia’s banking business fundamentally. Furthermore, this change is happening none too soon: any further delay could severely cripple the region’s continued progress and economic growth.