Community banks spring up in fight for small clients

"When you are off work, we are still working". The logo on the front gate of a China Minsheng community bank reflects growing competition among mainland lenders for average customers.

The 30-square-metre outlet is equipped with an automated teller machine, two mobile-phone banking terminals and an electronic ride for children. Fast-food restaurant coupons and stuffed toys scattered around the room remind you this is an outlet tailored to service the local community.

Minsheng Bank, the mainland's largest privately owned lender, plans to open 10,000 such "community convenience stores" in the next three years as it joins small and medium-sized players to compete for individual and small corporate clients.

"The banks are transforming to cope with the impact of interest rate deregulation," said Guo Tianyong, a finance professor with the Central University of Finance and Economics. "While large state-controlled banks have strong deposit bases and could move higher end to develop international businesses, smaller banks with limited outlets have to grab relatively small clients."

Local city commercial banks started to set up community outlets as early as 2007. The interest did not develop into a real trend until this year when Beijing endorsed community banks as a way to improve financial services to help rebalance the economy.

China Citic Bank and Industrial Bank opened their first community outlets this year. With one or two clerks working in these outlets, the banks maintain a low profile by only offering consulting services.

"We don't have counter services here. What I do is help people if they have questions about our services or problems in using the automated machines," a clerk at Minsheng's Santa community outlet in Beijing said.