Banking services online
( XING BAO)
01/07/2002
Both foreign and local lenders are going online as the battle for the e-banking market heats up between domestic and foreign banks following China's WTO entry. As China's Internet users skyrocketed from 8.9 million in 1999 to over 26 million in 2001, the ever-increasing online trade has resulted in a strong demand for online banking services. Statistics from the Ministry of Information Industry show that China has 1,500 e-commerce websites to date, with turnover reaching 77.16 billion yuan (US$9.2 billion) in 2000. E-banking trend "The integration of online banking and offline service has become a trend for the world's banking and financial sectors, and Chinese banks should strengthen themselves," said Xiao Gang, vice-governor of the People's Bank of China at a year-end forum. The Shenzhen-based China Merchants Bank (CMB) has pioneered the online business and receives more than 40 per cent of transactions from individual customers through the web. About 95 per cent of the e-commerce Internet portals conduct transactions through CMB. About 45 per cent of the bank's retail business and 15 per cent of the wholesale business have been moved from bank counters to the Internet or telephone. The Industrial and Commercial Bank of China, the largest commercial bank on the mainland, said its e-banking businesses have moved to the fast lane, chalking up 3.14 trillion yuan (US$380 billion) in turnover in the first 11 months of last year. Online banking transactions reported 110 billion yuan (US$13 billion) in November alone, an ICBC spokesperson said. "It's a global trend - people prefer to use remote banking services, which are more convenient and faster than face-to-face," said Eddie Wang, HSBC's chief executive (China business). HSBC demonstrated its ambitions for China's market last July by applying to PBOC to engage in online banking as soon as the central bank gave all banks the green light to go ahead with the service. Immature market Experts say e-banking is one of many strategic steps of foreign banks to expand network in China, which will enable them to serve customers in every corner of the country, as their branches will be restricted to certain cities for the first five years of WTO membership. However, executive vice-president of Nordea Financial Group Markku Pohjola believes only those with a good combination of traditional banking services and an e-banking system will weather the market. "I don't believe a foreign bank can do online business alone without having branches or direct customer contact," he said. China's e-banking is still in its initial stage, and basic infrastructure, technical support system and social credit system lag behind those of developed countries. Experts say there are still many uncertainties in the legal position, income sources, and viability of online transactions.
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