Boao key words: partnerships, restructuring, reshuffles
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The 2015 Boao Forum for Asia kicks off today in China's Hainan Province. The forum kicks off with some of the hottest topics on the internet industry and P2P financing.
Internet financing is the focus at this year's Boao Forum for Asia, taking a ride on the country's internet drive.
China is capitalizing on its massive internet user base, to move financing activities online, where the loan requirement is lower, and funding costs are cheaper. It bodes well for China’s new growth strategy to transfer wealth from SOEs to the private sector.
Just take a look at the growth of online payments. Total transactions of e-payments have seen an annual 30 percent gain each year since 2012.
Tjun Tang, managing director of BCG Greater China, says a convenient e-banking service is the No.1 factor for Chinese depositors when choosing which bank to park their cash. Tang says those consumers' decisions are critical for retail banking services, which will make up 40 percent of the total revenues for the banking sector by 2020.
And there's a shortcut for banks to stay ahead of the curve.
"In our retail banking 2020: eco system bank is a trend. Banks can make partnerships with tech firms in order to survive in the trend," Tang said.
For mega banks with complete service portfolios, the key is boosting the efficiency and awareness of their internet services.
Industrial & Commercial Bank of China is the first Chinese bank to make such a move. The world's largest lender by assets has relaunched its internet services this week under a new brand, e-ICBC. The brand integrates services from payments to financing and investment.
It's ICBC's answer to challenges from technology firms such as Tencent and Alibaba, which have started online banking services.
But besides those industry heavyweights, the bulk of the internet financing sector is currently experiencing a bit of a hiccup.
That's why borrowers' confidence on internet financing remains weak. And there are signs of growing financing costs online while interest payments stabilize. That's why the banking regulator is reported to squeeze the bubble out of the market.
Analysts expect more targeted lenders in the future to prevent an oversupply in capital online, and more importantly, to quench the cash thirst of China's industries.
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