China's commercial banks need to further simplify and personalize their services in a bid to compete with "digital disrupters" such as peer-to-peer (P2P) lending platforms and Alipay-like third-party payment tools, an executive from consultancy firm J.D. Power said Thursday.
Banks are "under tremendous pressure" when it comes to retail services, as Internet financing firms lure away individual customers who now increasingly prefer online services, Gerrit Kuyntjes, vice president for J.D. Power Asia Pacific Service Industries, told the Global Times in an exclusive interview.
The number of customers using mobile banking increased to 55 percent in 2016 from 21 percent in 2014, while the percentage of in-person banking decreased to 88 percent from 92 percent in 2014, according to a J.D. Power study on retail banking satisfaction released on Thursday.
Competition from Internet players is part of the reason behind dropping profit growth for banks. P2P platforms are taking away lending business while payment tools like Alibaba Group Holding's Alipay are encroaching on their payment services, said Kuyntjes.
"These 'digital disrupters' are going to be part of the landscape … but it doesn't mean that commercial banks will go away," Kuyntjes said, noting that banks should further simplify and personalize their services to remain competitive.
While Internet financing firms enjoy the upper hand in data and consumer behavior analysis, traditional banks remain stronger in areas such as product design, risk management and regulatory know-how.
Kuyntjes also noted that brick-and-mortar branches are equally important for commercial banks in a bid to provide more sophisticated services to customers and also raise service accessibility.
Challenges brought about by Internet financing firms so far mainly lie in the retail sector.
The dominant position of traditional banks in business-to-business commercial banking remains solid, Kuyntjes said.
In spite of the rivalry from Internet players, China's banks still managed to generate better consumer experience from 2015.
Customers' overall satisfaction reading averaged 806 in the 2016 banking satisfaction study, a 19-point improvement from the previous year.
Bank of Communications ranked highest in retail banking customer satisfaction for a third consecutive year, according to the study. It is the only major State-owned bank that places in the top five.
The gap in consumer satisfaction between major State-owned banks and shareholding commercial banks narrowed to 30 points this year from 47 points in 2015, according to J.D. Power.
