Overall best national retail bank
China Construction Bank
China’s urban population is among the most tech-savvy in the world, yet members of its rural population often have much more basic needs. China Construction Bank, more than any other bank in China, has been able to serve both populations.
The bank set technology innovation, financial inclusion and mortgage lending as the three main pillars for its 2019 strategy. CCB, under vice-chair Zhang Jianguo, has made steady progress in all three, while being the top earner among the big four Chinese banks in the retail banking segment.
Pre-tax profit from CCB’s retail banking division reached Rmb85.9 billion ($12.2 billion) for the first six months of 2019, the most recent period for which public data is available. That represents a 6.4% increase year on year, meaning the bank has both the largest retail profits and the fastest profit growth among the big four state-owned banks.
CCB maintained its leading position in the consumer loan sector. The bank’s Quick Loan online borrowing platform now has more than 10 million customers.
CCB ranked top in domestic personal lending at the end of June 2019. Its outstanding personal loans grew 5% from the end of 2018, reaching Rmb6.13 trillion.
As one of the big four state-owned commercial banks, CCB also heeded the call to provide support to China’s lower-income individuals. By June 2019, the bank had a total of 224,000 Yunongtong service outlets – a fintech-based, county-level platform designed to serve rural customers with services including investment, loan and insurance.
In the first half of 2019, financial inclusion loans increased by Rmb221 billion to Rmb831 billion and the number of borrowers increased by 207,900 to approximately 1.23 million.
The bank also showed fast growth in mobile payments. Long E Pay is CCB’s version of WeChat Pay. The app offers payment solutions for goods and services ranging from restaurants and supermarkets to train tickets and healthcare expenses. Last June, the number of merchants using the service reached 2.46 million, an increase of 41% year on year.
CCB is also the go-to bank for residential mortgages. Its outstanding residential mortgages increased by Rmb302 billion from the end of 2018, reaching Rmb5.06 trillion by June last year. CCB offered Rmb115 billion of personal indemnification housing loans to nearly 600,000 low-income households in the first half of 2019.
Best retail bank for credit cards
China Merchants Bank
|Liu Jialong, China Merchants Bank|
China Merchants Bank issued more than 90 million credit cards in the first six months of 2019, ranking fifth in the country. However, the volume of CMB’s credit card transactions grew 12% year on year and reached Rmb2.04 trillion ($290 billion), ranking top among all Chinese banks and Rmb420 billion more than the nearest rival. CMB also managed to secure the top spot in both credit-card business revenue and offshore credit-card transaction volume in 2019.
What has set CMB apart from formidable competitors including China’s big four state-owned banks – each of which issued more than 100 million credit cards in the first half of 2019 – is the bank’s effort to use technology and big data.
Chinese consumers have leapfrogged a generation of consumer finance, moving straight from debit cards and cash to mobile payments. But CMB was way ahead of its peers in seeing that coming. The bank linked its credit cards to its own mobile payment app in 2010, three years before WeChat Pay was born.
The CMB Life app – its Chinese name can be roughly translated as: ‘Life on your palm’ – can be downloaded and used by everybody, not just CMB cardholders. In fact, by June last year, 29% of the users of the app did not have a CMB credit card. That has played a crucial role in helping CMB acquire new credit card users.
By June last year, the app had more than 80 million users, with a monthly active user base of more than 39 million, way ahead of similar apps developed by other banks.
The consumer finance transaction volume on CMB Life accounted for 48% of the bank’s total of such credit-card turnover.
CMB has employed both artificial intelligence-driven and celebrity endorsement marketing strategies, using big data algorithms to accurately target potential card users and inviting famous writers and actors to unveil new credit card products.
As a result of its efforts, the number of newly issued CMB credit cards increased 7.5% year on year in the first half of 2019. Income from the bank’s credit-card sector also jumped 33% year on year in the same period.
Best retail bank for online banking
Industrial and Commercial Bank of China
|Zhou Yang, ICBC|
As the largest bank in China, Industrial and Commercial Bank of China is never worried about not having enough retail clients. By June 2019, the bank boasted 627 million retail customers, issued 874 million new debit cards and 154 million new credit cards. ICBC also has the largest number of online banking clients among all Chinese banks.
But the bank did not rest on its laurels. Instead, ICBC has kept up its effort to move the entire retail banking segment online. By June 2019, 98% of ICBC’s internet financial transaction volume was generated online, hitting Rmb311.26 trillion ($44 trillion), up 0.3 percentage points from the end of 2018.
One of the bank’s most impressive accomplishments in 2019 was the development of ICBC e Wallet, which connected more than 260 online platforms with retail consumers by the end of September last year.
The electronic wallet opens up the bank’s huge selection of application programming interfaces (APIs) to third-party service providers such as Xiaomi, Vanke and JD Finance. To enjoy the ICBC e Wallet services, users do not need to be clients of ICBC, hold ICBC bank cards or have downloaded other ICBC applications. They can simply apply for electronic ICBC accounts through partner companies’ online platforms.
By the end of September, ICBC had provided financial services such as wealth management, payment settlement and small-sum financing to more than 10 million individual users through ICBC e Wallet. But it has not limited its efforts to this one app: the bank has also improved its existing core online platforms such as ICBC Mall, ICBC e Loan and ICBC e Charity.
Best retail bank for innovation in technology
China Merchants Bank
|Zhang Dong, China Merchants Bank|
Many Chinese banks have made impressive progress in promoting technology innovation, but the bank that has pushed furthest in all aspects of its business is China Merchants Bank, led by Zhang Dong.
In the first half of 2019, the bank spent Rmb3.63 billion ($517 million) or 2.8% of its operating income on information technology, up by 64% year on year.
CMB has used fintech, especially big data and machine learning, to achieve plenty in recent years, including shortening the time of most personal loan decisions to under a minute and automating call centres while achieving a 98% customer satisfaction rate. The bank has also combed its dataset to create 1,800 distinct customer profile types and an all-important customer experience monitoring system.
CMB is innovative enough that its tech achievements are listed on not just one but multiple pages. But perhaps the most impressive during Asiamoney’s awards period was a series of landmark changes to the bank’s Flash Loan service.
By adding facial and fingerprint recognition and internally developed big data algorithms, the bank has managed to allow clients to apply online for retail loans at any time through a completely automated process.
By June 2019, the approval process for residential mortgages had a T+0 timeframe and for micro-finance loans a T+2 timeframe, representing a 7% improvement in efficiency compared with the end of 2018. The data algorithms can even help the bank set appropriate loan pricing depending on the real-time supply and demand of loans.
By the end of 2019, roughly 4.6 million customers had used the bank’s Flash Loan service. Perhaps most impressively, CMB’s asset quality improved. The balance of CMB’s non-performing loans amounted to Rmb53.2 billion by June 2019, a decrease of Rmb384 million from the end of 2018. The non-performing loan ratio of the bank also declined by 0.13 percentage point from the end of the previous year.
To help the bank’s own internal decision-making and marketing efforts, CMB has built a new big-data program that can analyse nearly 700 million credit records a day. That has not just made the bank better, it has also saved it money – roughly Rmb71 million a year – on data collection and analysis.