Innovation Is the Key to Success in China’s Banking Industry
China’s Banking Sector Is Evolving Swiftly, Driven by Digitization, Relaxing Government Policy, and Changing Consumer Needs. Innovation Will Be Required in Digital Finance, Community Banking, and Consumer Lending
The banking sector in China is reaching a new stage of evolution, and innovation will be required to compete, according to a new report from The Boston Consulting Group (BCG). The report, titled Formulas for Winning: Forging Innovation in China’s Banking Sector, is being released today. The changing dynamics of the banking sector are spurring modifications in consumer behavior as well.
To learn more about this transformation, BCG’s Center for Consumer and Customer Insight surveyed 1,800 people across many income levels in 14 cities in China. The survey found that as consumers are introduced to more new banking options, they come to expect greater creativity from financial-services providers. Innovation and differentiation, therefore, will be key to winning in banking, especially in digital finance, community banking, and consumer lending.
Digital finance is developing as digitization increases in China. In addition, new challengers, some from outside the banking field, are stepping up to overcome the limitations of traditional banking. The government appears to be taking an open and relaxed attitude towards the sector as well. What’s more, consumers are embracing the new offerings. “Innovative digital business models have changed a lot of the infrastructure and scenarios for financial services. As consumers learn and adapt to these new channels, their behaviors and expectations around banking are changing quickly,” said David He, a BCG principal and a coauthor of the report.
For community banks, merely being the closest available option for their customers is no longer enough to compete. These banks will need to specialize and differentiate to meet changing consumer needs.
Consumer lending is also growing more competitive and will require more innovation going forward. A good understanding of consumer insights will be especially helpful in creating business models that work in this relatively young field.
The report details the key capabilities that companies will need to master in order to achieve innovation in their business models. “Banks will need to develop sharp customer insights; find role models outside of the banking sector; make the first move; continuously pilot, innovate, and adapt; and build infrastructure capabilities. Those who work to understand consumer demands and innovate accordingly stand to win at a crucial stage of this sector’s evolution,” said Qin Xu, a BCG principal and a coauthor of the report.
A copy of the report can be downloaded at www.bcgperspectives.com.
To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or firstname.lastname@example.org.
About BCG’s Center for Consumer and Customer Insight
The Boston Consulting Group’s Center for Consumer and Customer Insight (CCCI) applies a unique, integrated approach that combines quantitative and qualitative consumer research with a deep understanding of business strategy and competitive dynamics. The center works closely with BCG’s various practices to translate its insights into actionable strategies that lead to tangible economic impact for our clients. In the course of its work, the center has amassed a rich set of proprietary data on consumers from around the world, in both emerging and developed markets. The CCCI is sponsored by BCG’s Marketing & Sales and Global Advantage practices. For more information, please visit here.
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About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries.
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