The Banking IT Market in China presents a big landscape which seeks to access, store, transmit, and manipulate information. One key area the Chinese market is currently looking to improve upon is technological access to financial services in rural China.
This is an area which is emerging and has much scope because of the present, high ‘cost to serve’ ratio. The whole quantum of revenues from Banking IT in the Chinese market was previously estimated to be around US$11.97 billion. But, Technavio has predicted further growth in coming years.
The Chinese market is witnessing an increasing trend of privatization of banking services for affluent sections of its population. IT spending in corporate and credit banking has witnessed significant growth as middle classes make a rapid transition, using modern banking services in China. In terms of IT spends in Banking sector, China is one of the fastest growing markets in Asia and is expected to grow at a CAGR of 11.39 percent.
The Chinese market is on a trajectory of IT adoption for analytic persistence and client retention. This attributes to the continuing rise in IT spending in the Chinese market in terms of security, channel digitalization, and IT infrastructure development.
IT is thus slated to play an important role in Chinese Banking, looking to cover a whole plethora of functions including risk management, channel integration, data analysis, and data mining.
Technavio analysts have identified 3 key trends that are fuelling growth in the Banking IT Market in China:
Adoption of Big Data Analytics
The Chinese market has an enormous challenge on hand in handling internet-based financial data. Banks are adopting big data technologies to improve risk management and customer segmentation abilities.
Processing big data is one essential technique which helps understand the nature of demand from customers. Various banks have already started trying to gain an edge by using applications for big data in China. Big data is being used in the Chinese market to achieve real time marketing in terms of communications, integration of e-commerce platforms with an array of business activities, to establish social network information database, and to facilitate small loans and microloans.
High Adoption of Digital Banking and Mobile Payments
China is among those countries which have the best penetration of mobile phones among the population. China’s increasing wealth and need for better personal banking has triggered a growth in mobile banking services.
With a rise in the usage of smartphones and a tech savvy population, mobile banking is one of those areas where Chinese banks are afraid of falling behind. Several banks are increasingly addressing the need for mobile banking and taking initiatives with employee software, customer-facing apps, and IT support.
With consumers increasingly accessing the internet through third generation mobile phones, Chinese banks are looking to leverage this opportunity to increase revenues, reduce operational costs, and to attract new customers. Chinese customers are also demanding for multiple channels of interaction with their banks. The Chinese market is hence witnessing a decrease in the traditional brick and mortar banking system. With choice comes competition, and with the regulatory push toward price transparency and rapid account switching, the customer churn is likely to increase the growth of the Chinese market.
Increased Adoption of Automated Services in Rural Areas
China is home to the world’s most extensive banking systems, catering to more than a billion people. Though China’s banking infrastructure is fragmented and complex, it has overcome redundant systems, an excess of disparate computing standards, and low levels of inter-regional network connectivity because of the adoption of automated services in rural areas.
There are about 520,000 ATMs in China. Banks in China recognize the importance of self-service channels with the benefits of reducing costs while generating additional revenue. Riding on the popularity of machines among the Chinese, most Chinese Banks are concentrating on long-term projects involving advanced automated technologies.
