Bank of East Asia expands retail banking in China through internet partnerships
Teaming up with mainland Chinese internet partners including a Tencent-backed banking unit and online travel platform Ctrip has been a major boost to Bank of East Asia’s retail banking operations in the mainland, according to deputy chief executive Brian Li Man-bun.
By joining forces with four technology companies, the Hong Kong-based bank has been able to offer 5 billion yuan (US$730 million) in loans to mainlanders over the past year, said Li.
Bank of East Asia, the largest family-owned, listed bank in Hong Kong, teamed up with Tencent-backed WeBank in November. Under their partnership, BEA is able to offer 12-month loans online of up to 30,000 yuan (US$4,740) without the customer needing to step into a bank branch.
It teamed up with online travel provider Ctrip last year to introduce a co-branded credit card in China.
The bank has partnered with two new mainland internet partners this year. Li declined to name them but said the tie-ups had also helped to bring in more retail customers in the mainland.
“The four mainland partnerships have helped us to offer more consumer lending and find new credit card clients. We will target more partnerships so as to offer bank loans and cross-sell other financial products to these customers,” Li said in an media briefing in Hong Kong.
China’s consumer finance industry was estimated to be worth 107.72 billion yuan in 2016, having more than doubled from a year earlier, according to a report by Kapron Asia, a financial services consultancy.
Li believes partnerships will help BEA to increase its retail lending to represent 30 per cent of its total mainland loan book by the end of 2020, up from only 20 per cent now. Corporate lending will fall to 70 per cent of all loans made in 2020, from 80 per cent now, in line with the bank’s strategy to expand its retail banking in mainland China.
Leaving behind the traditional approach of using a wide branch network to tap retail customers, Bank of East Asia over the past three years has cut back its mainland physical branch network from about 120 to 100 now.
Li said this was done because of the rising costs of maintaining a physical branch, which include rent and staff salaries.
Besides, he said mainland customers are so tech-savvy that they like to use their smartphones to handle banking transactions instead of visiting a branch.
“As such, we are considering teaming up with internet partners as an ideal way to expand our consumer lending to more customers,” he said.