Senior executives from consulting firm McKinsey said on Wednesday that China's banking industry could see big changes within five years if it fails to embrace digitalization rapidly.
John Qu, senior partner at McKinsey & Company, made this comment at a media briefing, adding that global banks' return on equity will fall from the current range of 8 to 9 percent to 5.2 percent in 2025 if they haven't taken any measures to cope with digitalization.
He said that although Chinese bankers have been actively involved in the digitalization, they're still unsure how to lay out a rational digital strategy, how to plan the digital implementation path and what kind of support they will need.
The leading international banks invest an average of 17 to 20 percent of their earnings before interest and tax for digital transformation and innovation, according to Han Feng, partner at McKinsey & Company.
However, she warned that banks' experience with digital strategic layouts, large-scale implementation, and systematic capacity building is generally insufficient. The results are naturally unsatisfactory as domestic banks begin to test digitalization, she added.
She suggested adopting new technologies to create new business models, such as direct banking, and she also noted that a comprehensive layout of financial technology and venture capital opportunities could be a way out.
