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Banks Should Put Consumers First
A firm grasp of the country's conditions and needs has once been a boast of domestic banks but their recent closure for the week-long Labor Day holiday indicates it might only be a fallacy.

As the Chinese began to celebrate their another "gold week" on May 1, domestic banks for the first time closed many branches to give their employees a luxurious rest to enjoy the festivities.

"Gold weeks" refer to the Labor Day, National Day and Spring Festival holidays, each of which lasts for seven days. The commercial benefits are all too obvious, as hundreds of millions of people flood into shops and tourist spots during the periods.

While most stores try every means to make a fortune from the "gold week" consumption boom, the banking sector unexpectedly decided to shut a lot of their doors, claiming they have ample reasons to do so.

The Beijing Bank Association announced shortly before the Labor Day holiday that two-thirds of State commercial banks and two-fifths of other commercial banks would close during the "gold week."

The three reasons the banking sector gave were the availability of machines for self-assistant banking services, cost concerns and employees' vacation rights.

The rapid development of bank card services are there for all to see. In Beijing for example, local banks have installed more than 1,900 automatic teller machines (ATMs) and 19,000 point-of-sale machines across the city, where local residents own more than 20 million bank cards accepted by these machines.

As to cost concerns, statistics show the volume of bank holiday business is less than 20 per cent of the average workday volume, and, therefore, it was just a rational choice by banks to cut down operations when business was not brisk.

And to defend the vacation rights of banks' staff as other workers was even more unimpeachable.

These reasons sound perfectly justifiable - from the banking sector's perspective.

Unfortunately, one thing of the utmost importance has been missed in the decision-makers' calculations - consumers' interest.

As a result of the bank holiday closure, a lot of individual clients suffered the inconvenience of lining up in the predictably crowded banks to save or withdraw money before the holiday, while others had to wait patiently for banking services which ATMs cannot provide during the "gold week."

In face of such public complaints, domestic banks found another and supposedly "better" excuse - that the holiday closure was an "international practice."

Sure enough, the wider use of bank cards is a global trend. In developed economies, credit cards has become a necessity for almost everyone to exempt banks from numerous person-to-person business transactions for individual clients.

As domestic banks had hoped, the use of bank cards rocketed during the "gold week." Statistics from the Beijing Bank Association showed that the use of bank cards in the capital in the holiday period quadrupled to a record high - 2.7 million separate transactions in a week, worth 1.28 billion yuan (US$154 million).

However, behind the rosy tint that the country is enthusiastically promoting the use of bank cards, is the more somber picture that people's traditional mode of consumption dies hard.

Though residents in Beijing hold more than 20 million bank cards, a large number of these cards lay idle in pockets. Initial statistics indicated each card on average was used less than 2.5 times a year. That means most customers still prefer face-to-face banking services.

Lack of a sober recognition of consumers' needs is extremely detrimental to domestic banks' reform in line with international practice.

Reducing service choice could lead to a temporary boom of consumption via bank cards but it could also hurt the masses' loyalty, a key competitive edge domestic banks so far enjoy.

Observers cried out for a largely State-owned domestic banking sector since the State pressed its bid to join the World Trade Organization 16 years ago.

Foreign banks' recent aggressive penetration into the Chinese market is supposed to galvanize less-efficient domestic banks into prompt reforms.

Admittedly, to stand up to competition in the form of powerful foreign banks is difficult but not impossible.

Close connection to people's daily lives through intermediary banking services, such as collecting water, electricity and telephone bills, was an essential asset for domestic banks. But only better services will make this asset profitable.

However, adoption of self-interested "international practices" such as the holiday closure is not a sincere way to meet the needs of consumers.

The interest of customers should always come first. Even banks' cost-trimming efforts should not come at the cost of clients' convenience.

Similarly, without denying bank staff holiday vacation, domestic banks should establish a new and improved working schedule for employees during holidays to serve customers.

More "gold weeks" will come but grace time left for domestic banks' preparation for the challenge of foreign banks is passing swiftly. Definitely, it will not pay to seek short-term benefits by turning a blind eye to reality.

(China Daily May 20, 2002)

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