Today, China is in the midst of another wave of change, with its business model transforming from one relying only on traditional lending business, towards one with a wider range of services and high proportion of fee revenues. This started from 2010, where banks began to offer bank wealth management and trust products, which were still lending/deposit replacement in nature; now banks are looking into areas such as broader wholesale solutions and wealth/asset management. At the same time, the industry is encountering amplifying credit challenges. All these have provoked a range of views over the current state of China’s banking system and raised a variety of questions over its future.
The agenda for banks is rich and complex, and will require recognition of the problems and a determined plan for immediate and sustained action. But it is eminently doable, while Chinese society has demonstrated the resilience, hard work and ingenuity to surmount larger challenges. The banks that make the right moves in the changing landscape will harvest the fruits of the world’s largest banking market, whether they are domestic or international players.